Chancellor of the Exchequer Rishi Sunak produced one of the most generous support packages in support of workers who could no longer do their jobs. While we won’t know the final bill for furlough for some months to come, the Government will certainly have to borrow enormous amounts of cash to see Brits through the pandemic. On November 25, the Office for Budgetary Responsibility (OBR), which keeps tabs on Government spending, estimated the borrowing for Covid would cost the Government a staggering £394billion in the 2020/2021 tax year.
That is the highest figure ever seen outside of a wartime period.
And to put this into context, before the crisis the Government was expecting to borrow about £55billion for the whole financial year.
But despite the scheme undoubtedly costing a lot of money, it has proved essential to Brits who, otherwise, would have suffered severe financial losses.
The scheme has already been extended three times and is now stretched to April 2021, in which it’s expected to end.
But with the current situation continuing to be precarious as vaccines are rolled out and schools are still closed, the future is looking uncertain.
The Chancellor is already facing pressure to extend the scheme past its sell-by date and further support the UK’s workforce.
While nothing has yet been confirmed, Associate employment solicitor at Paris Smith, Charlotte Farrell, told Express.co.uk the Chancellor is unlikely to withdraw support in such a short space of time.
Ms Farrell said: “It seems unlikely they will be able to withdraw support completely and leave businesses to get on with it themselves.
“We saw a big flurry of redundancies in July to October 2020 as businesses thought the scheme was ending and they geared up to having to survive without Government support.
“However, once the first extension to the scheme was announced these significantly reduced and many businesses have been treading water since then.
“If all Government support ended in April 2021, we are likely to see a return to mass redundancies, several business closures and an even worse effect on the economy than we are already experiencing.”
When asked if the Government could extend the scheme, Ms Farrell answered: “Almost certainly, yes.”
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“If lockdown restrictions ease and we return to a tiered system, a return to the later versions of the scheme might be less expensive for the Government, but still provide businesses with much-needed support.”
The last extension was hugely criticised for its late notice announcement, with the Government doing yet another U-turn at the last minute.
As a result, swathes of people lost their jobs as businesses thought they wouldn’t survive without the subsidised income.
Ms Farrell says, above all, the Government must provide clarity to claimants of furlough.
She concluded: “Whatever choice the Government makes, businesses are going to want notice of it, particularly if they are going to consider redundancies.”