The Labour Party is calling on Chancellor of the Exchequer Rishi Sunak to backtrack on his decision to scale back the government-run furlough scheme immediately.
“The chancellor’s refusal to abandon his one-size-fits-all withdrawal of furlough is a historic mistake that risks a python-like squeeze on jobs in the worst-hit sectors,” Shadow Chancellor Anneliese Dodds told The Independent.
“It’s not too late for the chancellor to see sense, change course and support the businesses and sectors that need it most,” she added, predicting that new vacancies will not outnumber jobless claims.
On 1 August, the UK will begin to wind down its job retention scheme, which had paid companies up to 80 percent of the wage bill for furloughed employees (up to a cap of £2,500 per month).
The level of grant will be reduced each month before the scheme expires at the end of October. Employers will now also be required to pay National Insurance and pension contributions for the hours the employee is on furlough.
Rishi Sunak has admitted that some of the £1,000-a-head bonuses, which employers receive for keeping their workers on, would go to firms that were not planning any furloughs.
According to the latest government data, 9.5 million people are using the scheme at a total cost of £31.7 billion ($41.6bn) to the Treasury.
The National Institute of Economic and Social Research published research this week suggesting that closing the programme could cost 1.2 million jobs and dash hopes of a V-shaped recovery.
Labour is launching a new “Jobs, Jobs, Jobs” campaign on Friday, calling on the government to extend and adapt the scheme. The campaign is being launched with the motto “24 hours to save British jobs”.
Labour leader Keir Starmer is seeking to revamp the programme to target aid at struggling sectors like hospitality and transport, set up a £1.7 billion ($2.2bn) fund to prevent businesses going under, and provide support for areas in local lockdowns, self-employed workers and those left out of existing schemes.