[Economy] Covid: What impact has the furlough scheme had?

[Mr.Talha]

 

Although much has changed since 20 March 2020, Chancellor Rishi Sunak's "unprecedented" furlough scheme has remained in operation.

However, it has been extended four times as the full impact of Covid on the UK economy became clear.

Drawn up after lengthy talks with business groups and union leaders, the scheme initially committed the government to paying 80% of the salaries of staff who were kept on by their employer while unable to work, covering wages of up to £2,500 a month.

The furlough scheme is now due to end on 30 September, but there will be some changes as it winds down.

From July, employers will have to contribute to furlough pay for hours not worked, starting with a 10% contribution in July and rising to 20% in August and September.

That will bring the government's contribution down to 70%, then 60%.

 

 

 

During the lifetime of the scheme to date, about 11.5 million jobs have been supported at one time or another, with a steep take-up in the first few months.

But that doesn't mean the government was ever paying that many people's wages at any given time.
According to data from HM Revenue & Customs (HMRC), the number of jobs furloughed peaked at 8.9 million on 8 May last year. It then fell steadily until late last year, when it picked up again, without ever hitting the heights of the first lockdown.

Since then, it has shrunk to about 3.4 million - but that still represents 12% of the UK's workforce. At the same time, those who remained in work saw their hours decline sharply, although there has been a significant recovery since then.

 

 

 

In his announcement in March 2020, the chancellor extended sympathy to those fearful of losing their livelihoods.

"To all those at home right now, anxious about the days ahead, I say this: you will not face this alone," he said.

Although he has since become one of the country's best-known politicians and currently enjoys one of the highest net approval ratings in opinion polls, Mr Sunak was fairly new in his post at the time.

A week and a half earlier, in his first Budget, he had announced a £30bn package to boost the economy and get the country through the virus outbreak.

Initially, that seemed like a lot. But the chancellor's Job Retention Scheme, to give it its official name. along with other support measures, would end up incurring a far bigger bill.