Chancellor Rishi Sunak has warned the state help is not sustainable as it could soon cost as much as the NHS. Official data shows that 27 million workers are being funded by the Government that was introduced to support businesses during the coronavirus outbreak.
Of those 27 million Britons, some are being paid through their employer’s furlough scheme claim and some have applied for unemployment benefits after loosing their jobs because of the pandemic crisis.
The remainder are public sector workers and pensioners.
On Monday night Rishi Sunak, the Chancellor, said that the cost was “clearly not a sustainable situation.”
Mr Sunak emphasised that Britain must return to work.
The news comes as Cabinet officials have been discussing the prolonged length of the lockdown and the increasing strain it puts on the country’s economy.
Chancellor Rishi Sunak has warned the state help is not sustainable
Mr Sunak said: “To anyone who is anxious about this, I want to give them reassurance today that there will be no cliff-edge to the furlough scheme.
“I’m working, as we speak, to figure out the most effective way to wind down the [furlough] scheme and to ease people back into work in a measured way.
“As some scenarios have suggested, we are potentially spending as much on the furlough scheme as we do on the NHS, for example. Clearly that is not a sustainable situation.”
Almost a quarter of all PAYE workers (6.3 million) in the UK have been furloughed by their employers.
The furlough scheme cost the Government £8 billion in the first month, while the NHS budget is approximately £11 billion a month.
The vital importance of social distancing
Therese Coffey, the Work and Pensions Secretary, announced to Parliament that 1.8 million people had made new claims for Universal Credit since the outbreak gripped the UK, with another 250,000 applications for Jobseeker’s Allowance, costing an additional £6.5 billion.
The total figure from adding the number of unemployed workers before the outbreak (1.2 million), public sector workers (5.4 million) and 12.6 million receiving a state pension, shows that a 53 percent of workers are now surviving on state funding.
In total, more than 27 million people out of a population of just over 52 million are relying on government schemes.
Senior Conservatives have urged Prime Minister Boris Johnson to ease the lockdown measures urgently as the situation was becoming “unsustainable”.
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Therese Coffey revealed that 1.8 million people had made new claims for Universal Credit
Lord Lamont of Lerwick, the Tory former chancellor, told The Telegraph: “It is not practical and not affordable for the state to pay people not to work – ultimately the Government only has the money it gets from taxation from people who create the wealth.
“It is not a sustainable position except in the short term. It illustrates the danger and precariousness of our situation.”
Mr Johnson is expected to outline the plans for a lockdown exit strategy on Sunday as businesses take the hit of being unable to open.
The Prime Minister is under pressure to find a way out of the lockdown that has crippled the economy without risking losing more lives to Covid-19 in a second wave of the outbreak.
Sir Iain Duncan Smith said lockdown should be ‘unlocked’ urgently
On Monday night Sir Iain Duncan Smith, the former Conservative leader and former work and pensions secretary, said: “This proves that we have to now be looking to unlock the lockdown urgently because this is unsustainable for much longer.”
Sir John Redwood, a Cabinet minister in John Major’s administration, said: “In a short-term crisis the state needs to pay people who cannot work. [But] furlough has to be a temporary measure. It can’t conceivably become the new normal; we can’t afford it.”
Mark Littlewood, director general of the Institute of Economic Affairs think tank, added: “We need to swiftly move away from such colossal state involvement in employment.
“If numbers like these persist, it will be a recipe for serious long term stagnation and decline”.