Chancellor Rishi Sunak announced yesterday that the Furlough Scheme, which many experts agree has helped to protect countless jobs, will be replaced by a new Job Support Scheme (JSS) from 1 November.
The new scheme, which will run for six months, will see the government contributing towards the wages of employees who are working fewer than normal hours due to decreased demand and the impact of the coronavirus pandemic on businesses.
A press release on the gov.uk website explains: “Employers will continue to pay the wages of staff for the hours they work – but for the hours not worked, the government and the employer will each pay one third of their equivalent salary.
“This means employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they can’t work.”
It continues: “In order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
“The Job Support Scheme will be open to businesses across the UK even if they have not previously used the furlough scheme, with further guidance being published in due course.”
However, analysis by the Resolution Foundation think tank warns that these measures are unlikely to stem “a major rise in unemployment over the coming months”, adding that “households now face a squeeze on living standards that they have largely been shielded from so far in this crisis.”
The Foundation has called on the Chancellor to “scrap the poorly targeted £7.5 billion Job Retention Bonus and reinvest it into the JSS to make it a genuine shared hours working scheme, with little or no employer contributions.”
The Job Retention Bonus is a one-off payment to employers of £1,000 for every employee who they previously claimed for under the scheme, and who remains continuously employed through to 31 January 2021.
The Foundation has also called on the Chancellor to extend the temporary boost to Universal Credit beyond March 2021, or “over six million households could face an income loss of £1,000 from next April – at a time when unemployment could still be at its highest level in a generation”.
Torsten Bell, Chief Executive of the Resolution Foundation, said: “With Britain facing a dangerous jobs cliff edge next month as the Job Retention Scheme winds down, the Chancellor has rightly stepped in to announce fresh emergency support to help firms and workers through a tough period of rising infections and rising unemployment.
“But while the Chancellor has rightly aimed to create a European-style short-hours working scheme, design flaws mean that the new Job Support Scheme will not live up to its promise to significantly reduce the rise in unemployment.
“Those mistakes could be addressed by scrapping the poorly targeted £7.5 billion Job Retention Bonus, and using those funds to ensure the new support scheme gives firms the right incentives to cut hours rather than jobs.
“While households have to date been protected from the worst of the economic hit from the pandemic, that is about to change. The coming rise in unemployment will mean a major living standards squeeze for families this winter.”