Rishi Sunak must steal Labour’s idea of a targeted furlough scheme extension

Rishi Sunak’s job retention scheme has been a rare success for Boris Johnson’s dismal government.

The trouble is, the way it’s being withdrawn threatens to undo much of the hard, and very expensive, work that went into getting it operating and saving jobs.

There isn’t a lot of steps in the way it’s being phased out. Employers are being asked to contribute a bit more to the wages of furloughed staff this month and next, before Sunak opens a trapdoor leading to a very hard floor several hundred metres below. Businesses without access to parachutes and base jumping skills are going to break, taking their employees with them.  

This is just as the rise in Covid-19 cases starts to show that those of us who’ve been banging on about second waves were on to something.

Enter Labour with a call to help pubs and some of the other sectors worst hit by the pandemic.

“The furlough scheme must be extended for hard hit sectors to save jobs now,” said shadow business secretary Lucy Powell.

She was right to raise the issue that goes way beyond pubs, many of which have already called last orders for the final time.

An awful lot of businesses can’t profitably operate under the necessary public health measures still in place. Live music venues and theatres are a good example; nightclubs are another.

Extending the scheme for them makes sense even if you agree with Sunak that keeping it going across the board would offer “false hope” to people in jobs that were always going to go.

I’m not sure I do. But a targeted replacement would at least ensure that businesses that would be perfectly capable of reviving themselves in, say,  a post-vaccine world are in a position to do so after one becomes available. You could also tweak it to ensure help is available to firms affected by local lockdowns.

Compare this approach to the replacement for the scheme that Sunak has on the books: the job retention bonus. It offers employers a £1000 payment for every furloughed worker still on their payrolls at the end of January. The problem with this is that it potentially wastes taxpayers’ money by subsiding firms that don’t need it.

Primark offers a very good example. The discount clothes retailer, which has proved there is still life in parts of the high street, has reopened its stores and bounced back strongly.

But plenty of those in a similarly strong position, companies that don’t need the money and wouldn’t have laid off staff, will put in for it. Why look a gift horse in the mouth?

Replacing the blanket bonus scheme with more comprehensive, but targeted, support that allows extended furloughs, or even mini furloughs where there are local lockdowns in operation, would represent a better, more imaginative approach.

Of course, you can see the problem, can’t you? Now Labour’s suggested it, Sunak can’t do it because, politics. 

Except that he can. All he needs to do is repackage it, call it something different, and present it as his own idea. It’s not as if the Tories haven’t done that before.

It’s just a matter of whether Sunak can work that out. He’s a former banker, so it shouldn’t be too hard for him.