Chancellor right to extend and reform the Job Retention Scheme

The Chancellor has made the right call in announcing a four-month extension to the Job Retention Scheme, opening it up to ‘partial furloughing’, and asking firms to contribute to the scheme instead of reducing support for workers, the Resolution Foundation said today (Tuesday).

Torsten Bell, Chief Executive at the Resolution Foundation, said:

“The Job Retention Scheme has been an essential lifeline for millions of families and hundreds of thousands of firms.

“The Chancellor is right to reject calls to swiftly end it and instead opt for a package of measures to extend and reform it. Moving too quickly could spark a huge second surge in job losses at a time when unemployment already looks set to be at the highest level for a quarter of a century.

“Adding flexibility so that employees can be partially furloughed will help support a return to economic activity, while asking employers to contribute towards the cost of their furloughed employees and maintaining payments to workers at 80 per cent of previous wages is the right approach.

“On both, the devil will be in the detail, with HMRC facing another big delivery challenge. The amount firms will be asked to contribute needs to be carefully calibrated to avoid triggering unnecessary redundancies.

“The Government’s plans for the Job Retention Scheme should remain dependent on the success of lifting elements of the lockdown safely. A further extension for the hardest hit sectors, such as pubs and bars, may well be needed beyond October.”