Will the government extend the furlough scheme?

As Boris Johnson announced some of the most severe restrictions on British public life in peace time from the state dining room of Downing Street in mid-March, Rishi Sunak was standing alongside the prime minister preparing to announce billions of spending.

To coincide with the enforced closure of pubs, bars, restaurants and other social venues, the chancellor, who had been in the role for just over a month, unveiled the Coronavirus Job Retention Scheme – one of the largest programmes of state intervention in British political history.

The unprecedented measure enabled businesses that had closed their doors to continue employing their workers, with the government paying up to 80 per cent of wages up to a total of £2,000 per employee each month. The latest statistics from the Treasury and HMRC show that 9.6 million jobs were furloughed with 1.2 million employers taking advantage of the scheme at a cost of £35.4bn.

However, the government began gradually phasing out the scheme over the summer, as coronavirus restrictions were loosening, and is sticking to its plan to end the programme on 31 October – despite repeated warnings of vast redundancies.

Just this week, former prime minister Gordon Brown said the country is facing a “tsunami of unemployment” unless efforts to protect jobs are stepped up, adding: “The 31 October cliff edge is going to be so damaging for lost jobs.”

With infections on the rise, ministers are facing escalating pressure to extend the scheme, especially for industries severely affected by the pandemic, or in areas where the government has imposed local lockdowns, such as Bolton.

Whether the government performs one of its familiar U-turns and extends the scheme remains to be seen, but with infections on the rise, ministers are facing escalating pressure to do so.

Inevitably, the imminent closure of the scheme is causing great anxiety. One daycare centre worker brought up the issue at the most recent No 10 coronavirus briefing, asking the prime minister directly whether the programme would be extended for those who cannot return to work.

“I think one of the difficulties with the furlough scheme, if we extend it more widely, you’re just keeping people in suspended animation when really we want people to get back to work if they possibly can,” the prime minister replied.

However, he also hinted at potential targeted measures, saying the government was “going to do everything we possibly can to support those who cannot work.”

Given the repeated warnings of a surge in unemployment, the prime minister may find in the next few weeks he has little choice but to extend the scheme – especially for industries still experiencing distress due to the pandemic.