Chancellor's new scheme 'may come too late for too many'

Following concerted campaigning from Unite, chancellor Rishi Sunak announced on Thursday (September 24) new measures to replace the current furlough scheme arrangements, which were slated to end on October 31.

Jobs Support Scheme

At the heart of this new package of support is a form of a short-time working scheme – called the “jobs support scheme” — where employers will now receive partial wage subisidies for keeping their staff on shorter working hours instead of making them redundant.

Effective from November 1, any business taking part in the new scheme must have their workers work at least a third of their usual hours, which will be fully paid by their employer as normal. For the hours that these workers are not in work, the government will pay a third of their normal pay, while the employer will also contribute a third.  

Including the time they are in work, under the new scheme workers will, according to the Treasury, receive 77 per cent of their normal pay overall.

The scheme will run for the next six months starting from November 1, and will target primarily small- and medium-sized businesses. Large businesses can participate in the scheme only if they have been able to show that their turnover has fallen by a third. Self-employed workers will be eligible for a grant under similar terms to this scheme.

Other measures announced in what Sunak called his “winter economy plan” included an extension of the cut in VAT to 5 per cent until March of next year for hospitality and leisure firms, and an extension of the time business are given to repay their emergency state-backed loans.

Announcing the latest measures to weather the economic storm caused by a pandemic that has seen a spike in new cases, Sunak said, “In March, the problem was that we ordered businesses to close. In response, we paid people to stay at home and not work.

“Today, the problem is different. Many businesses are operating safely and viably, but they now face uncertainty and reduced demand over the winter months.

“What those businesses need is support to bring people back to work and protect as many viable jobs as we can.”

Sunak noted that business which take up the new scheme can also be in receipt of the Jobs Retention Bonus announced in the summer, where employers would be paid £1,000 for every furloughed worker that they retain until at least January.

Although not highlighted in his speech, the Treasury document outlining the new scheme crucially makes clear that no business which participates in the scheme can make their workers redundant for the duration of the scheme. What’s more, large businesses which participate are expected to not pay out dividends to shareholders or other so-called ‘capital distributions’.

‘Unfinished business’

Unions cautiously welcomed the scheme, with TUC general secretary Frances O’Grady commenting that the scheme “will provide a lifeline for many firms with a viable future beyond the pandemic”.

“But there’s still unfinished business,” she added. “Unworked hours under the scheme must not be wasted. Ministers must work with business and unions to offer high-quality retraining, so workers are prepared for the future economy.

“And we’ll be looking closely at the details to make sure there are strings attached.

“The government should target help at industries facing a tough winter, and provide more support for families most at risk of hardship and debt.” 

Scheme will ‘steady the rocky floor’ for some industries

Unite general secretary Len McCluskey likewise cautiously welcomed the scheme but highlighted that significant gaps remain for workers in many industries.  

“The package of measures announced today by the chancellor will allow many workers and employers to breathe more easily,” he said. “For some industries this will steady the very rocky floor beneath them, something that we have been pressing for all summer in an effort to stop the redundancy floodgates from pouring open. 

“The chancellor has heard the incessant calls from unions, economists and business leaders and listened, and that is to be undoubtedly welcomed,” McCluskey added.

“Our fear though is that today’s assistance may come too late for far too many and leaves gaps that could see millions more facing poverty and joblessness in the coming weeks.

“Today, therefore, cannot be the last word from the government on the defence of people’s livelihoods.  We have seen a summer of jobs destruction but an absence of jobs creation.  We urge the government to work with us as we put our collective shoulders to the wheel in the task of recovering the economy, because the spectre of mass unemployment still stalks our communities. ”

Stop redundancies call

McCluskey issued a clarion call to employers to halt and reverse any planned redundancies in light of the new scheme.

“While we await the detail of criteria for large employers’ access to the scheme, there can be no doubt that in the UK’s strategically vital industries – such as aerospace, steel and automotive – today’s move to support wages means we stand a better chance of saving the jobs and skills needed to power the recovery,” he said.

“We call upon employers to now work with us on the urgent task of saving those jobs,” he added. “Reverse plans for redundancies and reflect on the opportunities now available to us: do not push the redundancy button.  Unite’s officials stand ready to work night and day with you to keep people in work and earning.”

McCluskey went on to say that the new scheme falls short of the sector-specific packages of support that certain hard-hit industries desperately need to survive the current crisis, which Unite has long called for.

 “Industries teetering on the cliff edge like aviation, retail and hospitality, where jobs are being lost hand over fist and where the impact of this crisis continues to be devastating, will need further support,” he said.

“Dismissing jobs in these sectors as not viable is to leave communities to rot and descend into a jobs wastelands, so we are determined to continue to fight for better and wider support for these workers,” McCluskey continued.

“We urge the chancellor to keep the unemployment situation under constant review and pledge to act swiftly should the measures announced today not have the desired effect of holding back a tide of job losses and poverty.”

By Hajera Blagg