Rishi Sunak has said that the furlough scheme could see a reduction in payments to 60% of wages
Chancellor of the Exchequer Rishi Sunak has begun detailed planning on how he will “wind down” the government’s subsidised furlough scheme that has been in place as many are out of work, he says he wants to do this without causing a “cliff edge”.
One of the options the Chancellor could consider, is cutting the wage subsidy down to 60% to encourage people to begin looking for new jobs if they have lost work due to the COVID-19 pandemic.
According to the Evening Standard, the scheme could then be reduced by even further than 60% over the coming months.
Mr Sunak said in an interview with ITV, that the government would end up spending as much taxpayer money on the furlough scheme as it does on the NHS if the right changes were not made.
“Clearly that is not a sustainable situation which is why, as soon as the time is right, we want to get people back to work and the economy fired up again.”
Another option being looked at by the Chancellor of the Exchequer, is to let some of those staff who have been furloughed to resume work, but with a smaller subsidy in terms of government payouts.
This option would follow a similar plan devised in France by President Emmanuel Macron, who has provided help to shops and other businesses in the country that cannot operate at full capacity due to social distancing measures and do not need to be staffed full-time.
So far 6.3 million people in the UK have been furloughed due to the economic shutdown caused by the COVID-19 pandemic, at the cost of £8 billion to the government.
Workers who are currently on the Furlough scheme have 80% of their wage subsidised by the government, at a limit of up to £2,500 per month, the scheme is set to continue until the end of June.
A government source said: “We are going to see a winding-down of the scheme and people being eased back to work gently.”
“What that will look like is the subject of discussions this week and the details are still being looked at by the Treasury.”
Defence Secretary Ben Wallace said: “It’s a good scheme. But at the end of the day we have got to get our economy back up and running and we’ve got to try and encourage as many people back to the workplace.”
“We obviously need to get people safely back to work so we can withdraw from that scheme.
“It’s been very successful at keeping jobs and firms alive … we also need to wean people off it.”
This comes as the easing of the current nationwide lockdown could be on the horizon, following the UK announcing its lowest daily death-rate since the end of March yesterday, with just 288 coronavirus-related fatalities.