RISHI Sunak has begun detailed planning on how to “wind down” the Government’s subsidised furlough scheme without causing a “cliff edge”.
One of the options being considered by the Chancellor is cutting the wage subsidy down to 60 per cent to encourage people to look for new jobs.
The leading option to end the Government’s job retention scheme is to cut the current subsidy from 80 per cent to 60 per cent and then begin to reduce it even further so Brits are more likely to start hunting for jobs, according to the Evening Standard.
Another option being looked at is to allow some furloughed staff to work, but with a smaller subsidy from the public purse.
It would follow a similar plan devised by French President Emmanuel Macron, which helps shops and other businesses that cannot operate at full capacity because of social distancing measures and do not need staff full-time.
So far 6.3 million people have been furloughed because of the economic shutdown caused by coronavirus – at a staggering cost of £8billion.
The scheme will continue until the end of June.
Overall, 27 million people are being funded by the state – more than half of all adult Brits.
But the Chancellor has said he aims to “wind down” the scheme gradually over the next few months.
He has been clear there will be no “cliff edge”, which MPs fear would trigger mass redundancies.
The Treasury is expected to make crucial calls on the subsidy scheme this week, ahead of Boris Johnson’s announcement on Sunday to lay out a blueprint to ease restrictions.
A Government source said: “We are going to see a winding-down of the scheme and people being eased back to work gently.
“What that will look like is the subject of discussions this week and the details are still being looked at by the Treasury.
Mr Sunak told ITV the Government would end up spending as much on furloughed employees as it does on the NHS if there were no changes.
He said: “Clearly that is not a sustainable situation which is why, as soon as the time is right, we want to get people back to work and the economy fired up again.”
Labour leader Sir Keir Starmer agreed the scheme could not “go on infinitely” and urged the Chancellor to create a category of “semi-furloughed” people who can work part time, and to grant an extension to businesses which could stay closed for months – such as pubs and restaurants.
The cost of the scheme was nearly twice as high as the estimates from last month, with 800,000 employers putting their staff on furlough.
Defence Secretary Ben Wallace said: “It’s a good scheme. But at the end of the day we have got to get our economy back up and running and we’ve got to try and encourage as many people back to the workplace.”
Health Secretary Matt Hancock said: “We obviously need to get people safely back to work so we can withdraw from that scheme.
“It’s been very successful at keeping jobs and firms alive … we also need to wean people off it.”
British Airways announced they would be making 12,000 people redundant, despite putting 30,000 of its 42,000 employees on furlough – triggering redundancy fears within the Government.
Another option – to end furloughing sector by sector as more areas of the economy are released – was rejected over concerns of creating a cliff-edge for some workers but not others.
A spokesman for No10 said: “You heard from the Chancellor last night where he said he was working on the most effective way to wind down the scheme and ease people back into work
“Ultimately we do need to make sure we can get our economy fired up and people get back to work.”
The Treasury has not responded to requests for comment on how the scheme will be ended.
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