Furlough rates plateau over the summer with the scheme ending in just three weeks’ time

The number of employees coming off the furlough scheme slowed in July, and plateaued in the first half of August with around 1.6 million employees still on the scheme, highlighting that the risks of a fresh rise in unemployment this autumn, the Resolution Foundation said today (Thursday) in response to the latest HMRC and ONS data.

New HMRC data on the number of employees on the furlough scheme up to the end of July showed that 340,000 people came off the scheme in July – far lower than the 550,000 fall seen in June. More up-to-date ONS data also published today shows that furlough rates were broadly unchanged between the end of July and mid-August.

Workers still on the scheme are heavily concentrated in a few sectors of the economy – with around half of all staff in air transport and travel agencies still on furlough.

London remains Britain’s furlough hotspot, with eight of the ten local authorities with the highest furlough rates in the capital – along with Crawley and Slough, whose local labour markets are dominated by Gatwick and Heathrow Airports.

The Foundation adds that while young people are still coming off furlough relatively quickly, older workers are more likely to be ‘parked’ on the scheme – with employees over the age of 65 the most likely to be furlough.

Recent Resolution Foundation research forecast that up to one million workers could still be on the furlough when the scheme closes on 30 September. And while the majority of these workers should return to their previous jobs, many are likely to lose their jobs – reinforcing why now is not the time to cut unemployment support by a £20 a week.

Charlie McCurdy, Economist at the Resolution Foundation, said:

“The number of people coming off furlough over the summer has slowed to a trickle, as some firms and sectors – notably overseas tourism – struggle to return to pre-pandemic levels of activity.

“As a result, up to a million employees could still be on furlough when the scheme closes at the end of this month.

“While we expect most of these staff to return to their previous roles, a significant number will not, and we could see a fresh rise in unemployment this autumn.

“Given these circumstances, now is not the right time to cut Universal Credit by £20 a week. The Government must change course.”