Labour calls for targeted support for worst hit businesses as furlough scheme winds down

The Labour Party has called on the government to change their approach to ending the furlough scheme, to better protect employers and workers in particularly hard-hit sectors, including sectors that are still not allowed to return to business under current guidelines. 

The government's current strategy is to wind down the furlough scheme, bringing it to a close at the end of October. Under Chancellor Rishi Sunak's plan, employers must pay National Insurance and pension contributions from today, then 10% of pay on top of this from September, rising to 20% in October.

Employers in sectors still unable to open, including night clubs and soft play centres, are being hit with a bill running in the tens of millions as all employers are now being charged for furloughed staff. Companies operating in northern areas that have re-imposed lockdown are also being charged for furloughed staff. 

Contributions for employers will amount to approximately £550 per employee on furlough over the course of the next three months, on average. 

The night time economy is set to be particularly hard hit, with 520,000 workers on furlough, as many venues including night clubs and live entertainment venues are having to remain shut and many pubs, bars and restaurants are under financial pressure. The sector as a whole is facing a bill of around £285 million just to keep their staff on the books over the next 3 months.

Additionally, the exhibition, trade show and events sector has already been hard hit by cancellations and redundancies - with little improvement expected over th next few months. The sector will have to pay almost £22 million in wage contributions to keep the 40,000 workers currently furloughed.

Ed Miliband MP, Labour's Shadow Secretary of State for Business, Energy and Industrial Strategy, said:

Many businesses still have little or no cash coming in, but are trying to do the right thing and save their employees’ jobs.

They now face the stark choice of letting go of their staff or facing a hefty financial burden to keep them on.

Businesses in vastly different sectors and circumstances should not be treated in this uniform way, and it is clearly unfair and illogical for those employers still locked down and unable to trade.

Unless Ministers recognise the scale of the jobs crisis and change course they will force employers to make cuts, and be culpable for thousands of workers across the country losing their jobs and livelihoods.

The changes were also criticised earlier this month by Scottish National Treasury spokeswoman, Alison Thewliss. She said that “the decision by the Tory government to cut the furlough scheme in the middle of the global pandemic, and ahead of a potential second wave, is dangerously premature and poses a threat to thousands of jobs across Scotland and the UK.”