A replacement to the furlough scheme is looking increasingly likely as the Prime Minister comes under pressure to avert a jobs crisis.
Chancellor Rishi Sunak announced on Twitter that he will make a statement today ‘on our plans to protect jobs through the winter’ to Parliament.
Sunak has cancelled the Budget to prioritise protecting millions of jobs in sectors hit by the latest government guidance on Covid-19.
It has been rumoured that a short-term working scheme – which would see the government pay half of the wages of staff working part time for the hours they are not at work – could replace the job retention scheme.
Number 11 said work on the scheme had been taking place in parallel with Budget preparations and the focus has been on jobs to avoid the expected three million unemployed.
The Treasury said: ‘We will always be honest with people about the difficult trade-offs that are involved here.
‘Not between health and the economy, but between keeping people in jobs and helping them find new ones. And between help in the here and now and rebuilding in the future.
‘That’s what people deserve.’
With the prospect of another six months of restrictions, Boris Johnson has faced calls to provide more assistance for firms and workers.
He promised ‘creative and imaginative’ action to protect jobs as he faced calls for a fresh economic rescue package after unveiling new coronavirus restrictions yesterday (see video above).
As our response to coronavirus adapts, tomorrow afternoon I will update the House of Commons on our plans to continue protecting jobs through the winter. pic.twitter.com/eP6aqcocxd
— Rishi Sunak (@RishiSunak) September 23, 2020
The damage to the economy could increase if tougher measures are needed, with ministers warning a second lockdown could be required if the new rules are flouted.
The furlough scheme, which has cost the government £39.3bn to date, expires at the end of October.
No further details were provided about the scheme yesterday and the Chancellor’s tweet came as the government confirmed more than 6,000 new coronavirus cases – the highest daily number since May 1.
A source close to the Treasury said: ‘No-one wanted to be in this situation but we need to respond to it.
‘The chancellor has shown he has been creative in the past and we hope that people will trust us to continue in that vein.
‘Giving people reassurance and businesses the help they need to get through this is uppermost in his mind.
The Prime Minister added: ‘What we will do is continue to put our arms around the people of this country going through a very tough time and come up with the appropriate creative and imaginative schemes to keep them in work and keep the economy moving.
‘These are indeed tough times and I have no doubt that many businesses, many employees are feeling a great deal of anxiety and uncertainty and we will do our level best to protect them throughout this period.’
Chancellor Rishi Sunak scheme is reportedly based on a new German-style plan to avoid mass unemployment once furlough ends, with the government and firms sharing the cost of topping up wages for employees only able to work part-time due to the pandemic.
Nona Bowkis, a legal expert for motor trade specialists Lawgistics, said she thinks a replacement is ‘very likely’.
She told Car Dealer: ‘I think a second furlough scheme of sorts is more likely now the medical and scientific advisers have been brought out this week to warn of the virus getting out of control and now that Boris is back to encouraging home working for those who can.
‘Whether it will be sector-specific for the arts, aviation and hospitality for example, we will have to see.
‘Many of the dealers and garages we talk to have already streamlined their businesses and made their staffing decisions based on efficiency savings and new ways of working.
‘This is perhaps one of the reasons Rishi Sunak has been in no hurry to make any new announcement, as he wants to see evidence of whether he can actually save jobs by putting a new scheme in place or if it is just delaying the inevitable at a direct cost to the tax payer.’
First published: Wednesday, September 23 at 1633. Updated: Thursday, September 24, 0639