What happens now furlough has ended?
The Coronavirus Job Retention Scheme (Scheme), which has been heavily praised during the pandemic, and even hailed as the Government’s biggest success, came to an end yesterday.
Introducing the concept of ‘furlough’ to the UK, the Chancellor announced the start of the Scheme on 20 March 2020. Designed to be a limited measure to protect jobs that was due to come to an end in June 2020 the Scheme has been extended four times and has changed in scope along the way.
It is estimated that over 11 million jobs have been subsidised throughout the duration of the Scheme at a cost of around £70bn to the UK Treasury.
Despite its success, the Scheme was not without its issues. Rushed in quickly in response to the pandemic, the rules were initially vague, conflicting and in some cases, non-existent. Updates to the Scheme rules were usually issued after 5pm on a Friday and HR professionals and employment lawyers spent long hours trying to advise clients on this brand-new concept with very little in the way of clear guidance from the Government and Treasury. Due to the very nature of the Scheme’s birth, ‘furlough fraud’ was anticipated and indeed, initial estimates are that the sums claimed through the Scheme illegally could be more than £7bn.
There were approximately one million workers still furloughed when the Furlough Scheme ended so there is uncertainty about what will happen to them now. Figures released by the government indicate that those sectors which were still the most reliant on the Scheme are those that have been affected the most by lockdown, such as the travel and hospitality sectors. Consequently, there are real fears that a raft of redundancies is coming as parts of the economy are yet to fully reopen.
The Chancellor has been asked if the Scheme could remain open for those sectors who have been particularly affected by the pandemic for a further 6 months, which would cost an estimated £600million. Indeed, the Unions have even called for the implementation of a permanent furlough scheme to deal with any future lockdowns.
The Chancellor is however adamant that now is the right time to end the Scheme, so a further extension is unlikely, but new measures to support job retention over the winter are likely to be announced.
So, for now all we can do is say goodbye to a scheme that loomed large over British business for the last 18 months and ask ourselves one burning question: “will the government reinstate the promised £1,000 per employee Job Retention Bonus?”.