UK furlough scheme end: Rishi Sunak unveils masterplan to stop soaring unemployment

UK furlough scheme end: Rishi Sunak unveils masterplan to stop soaring unemployment

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Delivering his summer mini-Budget in the Commons, he said the message to firms is “if you stand by your workers, we will stand by you”. The cash pledge will cost £9billion if all 9.3 million people go back to their old jobs. He also unleashed a £2billion “kickstart scheme” to create hundreds of thousands of jobs for young people.

Mr Sunak said the plan is aimed at preventing an entire generation being “left behind”.

Other measures to keep Britons in work included 30,000 new traineeships for young people in England, a £1.6billion boost for the arts and heritage sector, the doubling of front line staff at job centres, as well as an extra £32million for recruiting extra careers advisers and £17million for work academies in England.

Employers will not have to pay any tax on coronavirus swab tests provided for their staff, Mr Sunak announced.

Mr Sunak said employers will qualify for the Jobs Retention Bonus when they bring someone back from furlough.

Chancellor Rishi Sunak

Chancellor Rishi Sunak (Image: Getty)

To get the bonus, bosses must pay each worker at least £520 per month on average, and continuously employ them through to January 31.

Employers will get £1,000 for each qualifying furloughed worker that they bring back.

The government was previously warned how unemployment will hit five million unless urgent steps are taken to help businesses survive.

The Chancellor also confirmed he won’t be extending the furlough scheme, which is due to end in October.

The government will begin to wean off its support from next month, where employers will be expected to contribute national insurance and pension contributions from August – previously, the government would foot this bill.

Annaliese Dodds

Annaliese Dodds (Image: PA)

Then in September, they’ll have to pay 10 percent of salaries as well, before this increases to 20 percent of salaries from October.

Addressing the House of Commons Mr Sunak said: “It’s vital people aren’t just returning for the sake of it – they need to be doing decent work.”

The youth “kickstart” fund will subsidise six-month work placements for people on Universal Credit aged between 16 and 24, who are at risk of long-term unemployment.

The CBI praised the scheme as “a much-needed down payment in young people’s futures” and unions said it was “a good first step”.

For each job, the government will cover the cost of 25 hours’ work a week at the National Minimum Wage – £4.55 for under 18s, £6.45 for 18- to 20-year-olds, and £8.20 for 21- to 24-year-olds.

Employers will be able to top up that payment if they wish.

Mr Sunak said it would allow young people “the opportunity to build their skills in the workplace, and to gain experience that will improve their chances of going on to find long-term sustainable work”.

The scheme will open for applications in August, with the first jobs expected to start in the autumn, and run until December 2021 – with the option of being extended.

It will cover England, Scotland and Wales, and the government said it would provide additional funding to Northern Ireland for a similar scheme.

Labour’s shadow chancellor, Anneliese Dodds, said the kickstarter scheme “should help many young people to access work” but said the government had not yet done enough to address the threat of mass unemployment.

She called on it to extend the furlough and self-employed schemes, and create “tailored support” for older people or those living in hard-hit areas.

The director-general of the CBI, Dame Carolyn Fairbairn, said the announcement could see the government “lessening the potential scarring impact of the pandemic for the next generation”.

Paul Johnson, the director of the Institute for Fiscal Studies, said the scheme would “encourage employers to take on those most at risk” during this crisis but it could result in “creating jobs which aren’t really jobs” or push other people out of work.

But the TaxPayers’ Alliance warned the scheme could turn into a “massive own goal” for the jobs market.

John O’Connell, chief executive of the TaxPayers’ Alliance, said: “Subsidies for temp work won’t offer young people the proper opportunities they need to clamber onto the career ladder, but may only postpone painful youth unemployment. 

“Long term measures to boost jobs and investment, such as cutting the employers’ NI jobs tax, would be a much more sustainable answer.”

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