Targeted furlough scheme lacks clarity and has come too late for some workers, chancellor told

Jobs have been lost due to the delay in announcing a targeted furlough scheme and more support is still needed to help businesses through local lockdowns, the government has been warned.

Businesses welcomed Rishi Sunak’s announcement on Friday that the government will pay two-thirds of wages, up to a maximum of £2,100, for firms ordered to close due to virus rules.

But there were calls for further clarity about how the scheme would work and exactly who would be eligible.

Delay has already cost jobs

Torsten Bell, chief executive of the Resolution Foundation, pointed out that the delay in announcing support meant jobs that might have been saved will have been lost.

The foundation, along with unions and business groups, have been calling for targeted furlough support for three months. In the meantime, some employers have already let people go, believing that the furlough scheme was to end on 31 October.

“It has been clear for some time that this form of a more sectorally and geographically targeted furlough scheme would be required to see us through a difficult winter,” Mr Bell said. “The delay in putting it in place will have come at a high price in jobs lost.

“Economic policy now needs to keep pace with the spread of this virus, if we are to suppress both the disease and the rise in unemployment that is now under way. We need more support for the six in seven workers who do not qualify for a £500 payment if they are required to self-isolate. The Job Support Scheme also needs to give firms a clearer incentive to cut hours rather than jobs in the difficult months to come.”

More help needed

TUC general secretary Frances O’Grady welcomed the additional support but warned ministers need to do more “to stop the devastation of mass unemployment”.

“Firms which aren’t required to close but will still be hit by stricter local restrictions need a more generous short-time working scheme. And there needs to be extra help for self-employed people in local lockdown areas too.  

“Nationally, industries like the arts, hospitality, retail and aviation face a long, tough winter. These sectors need targeted help. And we need proper investment to create good new jobs in the green tech of the future.”

‘Very light on detail’

Rustom Tata, chair of city law firm DMH Stallard, said it was not yet clear how the scheme would work and precisely which businesses would be ordered to close in any local lockdowns.

“The reference to two thirds of wages being paid will of course again be subject to limits, and there will presumably also be qualifying conditions around when the individual worker needs to have started working for the employer.

“The further support has been described as an ‘expansion of the Job Support Scheme’, but we still don’t have the real detail about how the successor to the furlough scheme is to operate.

“We await detail as to precisely which businesses will be ordered to close.  As the first minister in Scotland has found, describing that clearly isn’t a piece of cake.”

The only venues currently required by law to be closed across England (and therefore able to access this new scheme) are nightclubs, dance halls, discotheques, sexual entertainment venues and hostess bars. Pubs and restaurants are expected to be added to that list for areas subject to local lockdowns.

What about those affected but not required to close?

By targeting support, the government creates grey areas where it is not clear who is eligible and who isn’t, which could cause problems.

Pinsent Masons employment partner Dr Anne Sammon explained: “Where, for example, a retailer has to close because of local restrictions, the staff who work in that particular branch would seem to be in scope, but what about the support functions for that specific region, like the HR person?  

“In theory, they may be able to carry out their role from home but have little to no work to do, so will an employer benefit from the government funding for their wages too? Employers need further information and clear guidelines around this otherwise we may see a number of difficult cases arising.”

A lifeline

“This new intervention should provide a lifeline for many companies and people impacted by the efforts to stop the virus spreading,” said Roger Barker, director of policy at the Institute of Directors.  

“Alongside wage support, ramping up grants for affected firms marks a sensible step.

“The government should also remain alive to the potential second-order impacts of local lockdowns – which will affect firms in other areas and across the supply chain. Discretionary grants allocated through local authorities could help to address these issues, as could further modifications to the Jobs Support Scheme.”