Chancellor's job package: Many on furlough likely to lose jobs, IFS warns

24 September 2020, 12:42 | Updated: 24 September 2020, 20:01

Rishi Sunak announces new measures to protect jobs

By Asher McShane

The Chancellor today unveiled measures to stave off job losses ahead of Christmas including a scheme that will keep workers in their jobs on full pay while only working a third of their normal hours.

Under Rishi Sunak's new 'Job Support Scheme', businesses and the Government will pay two thirds of the wages of people in 'viable jobs' who are working fewer hours (at least a third) due to the coronavirus downturn.

Mr Sunak also extended a 15 per cent cut to VAT until the end of March 2021 with employers given the option of repaying their VAT bills over 11 repayments, with no interest.

After the announcement, Institute for Fiscal Studies director Paul Johnson posted online: "This is a v big change from furlough. Less generous. Only open to those who are working a third of normal hours.

"Understandable given need to adapt as economy changes. Can't pay all wages forever. But a lot on furlough now likely to lose their job."

Mr Sunak told the Commons: "Our economy is now likely to undergo a more permanent adjustment. The sources of our economic growth and the kinds of jobs we create will adapt and evolve to the new normal.

"And our plan needs to adapt and evolve in response. Above all, we need to face up to the trade offs and hard choices coronavirus presents and there has been no harder choice than to end the furlough scheme.

Rishi Sunak's jobs package was described as 'less generous' than furlough
Rishi Sunak's jobs package was described as 'less generous' than furlough. Picture: PA

"The furlough was the right policy at the time we introduced it, it provided immediate short-term protection for millions of jobs through a period of acute crisis.

"But as the economy re-opens it is fundamentally wrong to hold people in jobs that only exist inside the furlough."

He said the scheme will cover "two-thirds of the pay they have lost by reducing their working hours".

"The Jobs Support Scheme is built on three principles," he said.

"First, it will support viable jobs. To make sure of that employees must work at least a third of their normal hours and be paid for that work as normal by their employer. The Government, together with employers, will then increase those people's wages covering two-thirds of the pay they have lost by reducing their working hours, and the employee will keep their job.

"Second, we will target support at firms who need it the most. All small and medium-sized businesses are eligible but larger businesses only when their turnover has fallen through the crisis.

"Third, it will be open to employers across the United Kingdom, even if they have not previously used the furlough scheme.

It begins on November 1 and will be in place for six months. The existing furlough scheme ends on October 31.

Employers retaining furloughed staff on shorter hours can claim both the Jobs Support Scheme and the Jobs Retention bonus, Mr Sunak said.

He also announced that the temporary reduction of VAT rates from 20% to 5% will remain in place until 31 March 2021.

This story is being updated

More Latest News

See more More Latest News

Sir Chris Hoy said 'if you're over the age of 45, go and ask your doctor' for screening

Sir Chris Hoy calls for men to be offered prostate cancer screening from the age of 45 after his terminal diagnosis

Kamala Harris went door-knocking in Pennsylvania on the night before the election

Kamala Harris surprises residents in Pennsylvania as she goes door-knocking in final bid to win votes

Nearly 600 police officers sacked in a year amid as shocking figures reveal extent of misconduct crackdown

Nearly 600 police officers sacked in a year as shocking figures reveal extent of misconduct crackdown

Hundreds of people died in the devastating flooding in Spain

British man who survived Valencia floods describes hearing his neighbours’ horrifying final screams before they died

Amy Dowden said she was ‘heartbroken' as she left this year's Strictly Come Dancing

Amy Dowden says her ‘heart is breaking’ after she confirmed she will not return to Strictly

Anthony Scaramucci said the row between Trump and Labour would blow over

'Anglophile' Trump's row with Starmer will have 'no impact' on wider relations with UK, Anthony Scaramucci says

Nick Ferrari attends his first Trump rally in Pennsylvania as he meets the crowd in 'the poorest city in the United States'

Nick Ferrari attends his first Trump rally in Pennsylvania as he meets the crowd in 'the poorest city in the US'

Exclusive
Nick Ferrari bumps into Nigel Farage in Pennsylvania as he reflects on Trump's "remarkable" foreign policy achievements

Nick Ferrari bumps into Nigel Farage in Pennsylvania as he reflects on Trump's 'near-death' experience

Live
US Presidential Election 2024 LIVE: Millions of Americans head to the polls as election day arrives

US Presidential Election 2024 LIVE: Millions of Americans head to the polls in the final race for the White House

Proud Boys claim they will go to voting places as Trump repeats election fraud lies.

Proud Boys making plans to mobilise as Trump repeats election fraud lies

File photo of a real NHS dentist

Desperate Brits fall for scam 'fake NHS dentists' amid years-long waits for appointments

The Kremlin is suspected of plotting the attack

'Parcel bombs' that blew up in warehouse were 'rehearsal' for Russian explosion attack on flight to US

Keir Starmer is not set to ban smoking in pub gardens, contrary to earlier reports

Cigarettes will not be banned in pub gardens under new Labour plan create 'smoke-free generation'

Former President Donald Trump speaks at a campaign rally in Reading, Pennsylvania

Trump threatens Mexico with 100% tariffs unless it cracks down on border crossings

Bridget Phillipson told Tonight with Andrew Marr that the fee hike was necessary to secure the future of universities.

‘Universities must reform’ says education secretary after first hike in tuition fees in 8 years

Two more cases of a new strain of mpox have been detected in the UK, officials say

Two more cases of new mpox strain detected in UK