Furlough extension: ‘There will be casualties’ if Rishi Sunak doesn’t extend scheme | Personal Finance | Finance


Furlough has cost the Treasury £46.6billion as of December 2020, as more than 9.9million Brits were reliant on the scheme to get by. The 9.9million people have been furloughed by 1.2million businesses, which highlights exactly how much the Government has invested into safeguarding the economy through this unprecedentedly tumultuous year. But now, the furlough scheme is expected to end in April 2021, and with no sign from the Chancellor as of yet the scheme could face an extension, people are undoubtedly concerned about the implications of a cliff-edge ending.

Economists have already forecasted unemployment rates to skyrocket once the furlough scheme ends.

Despite the Government withdrawing support, lockdown is still in full force which means most businesses furloughing their employees will not have seen a notable boost in income by that time.

Charlotte Geesin, head of employment law and business immigration at HR and employment law consultancy firm, Howarths, told Express.co.uk it won’t be good for the people and businesses alike if the scheme closes in April.

Ms Geesin said: “If and when furlough does end, there will undoubtedly be casualties.

READ MORE: Mike Tindall has ‘damaged’ Royal Family’s reputation over furlough row

“Plenty of employers have been relying on the furlough scheme to see them through the pandemic, but with eroded supply-chains and shifts in commercial and personal capital – all compounded by Brexit – it is extremely unlikely that those employers will immediately have the same level of work available when furlough ends.

“Some businesses will already know that they will not survive when furlough ends, and others will be planning to make significant reductions in headcount.”

The end of furlough is likely to coincide with the easing of lockdown restrictions in the UK.

And with the vaccine rollout well underway and the Government on track to reach their 15million vaccines target by February 15, this could be soon.

Ms Geesin acknowledged the “likely” rise in unemployment, and said this could mean seeing changes to the current welfare and benefits system.

The last recorded date on October 8, 2020, shows 5.7million people were claiming Universal Credit in the UK – up from two percent in September 2020.

This is a huge increase from pre-pandemic levels, as in February 2020, there were just 2.7million households claiming the benefit.

A household in Universal Credit statistic terms constitutes a single person, or a couple living together without any children.

Ms Geesin said: “We might see the introduction of new hardship benefits or changes to statutory sick pay (SSP).”

According to the employment law professional, this could spell bad news for self employed workers and the future of contracts.

She explained: “Unfortunately, this might also lead to a rise in unscrupulous employers using zero-hours contracts and the gig economy to their advantage.

“This could exploit the most vulnerable, who need an income over and above everything else and so are willing to forgo their employment rights in exchange.”

More details about furlough and its extension will likely be made available after the March 3 Budget, in which Mr Sunak will address the nation in regards to the state of the nation’s finances.

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