250,000 firms could lay off workers as Sunak mulls furlough withdrawal

Linda J. Dodson

As many as 250,000 businesses could be forced to lay off staff because they cannot contribute to wage bills as the taxpayer-backed furlough scheme is wound down, a bleak survey suggests.

A quarter of the 1m companies relying on Rishi Sunak’s wage subsidies will be forced to make “difficult decisions” on layoffs in the coming months, said the Institute of Directors lobby group (IoD).

It will spark fears of a surge in unemployment when the lockdown lifts, hammering Britain’s ability to bounce back fast.

Chancellor Rishi Sunak is expected to shortly unveil his plan to wind down  the furlough scheme, which pays employees up to £2,500 a month if they are unable to work and has been widely cheered for preventing a jobs catastrophe.

From August, businesses will have to pay a fifth of furloughed staff wages themselves under plans being drawn up by the Treasury.

But only half of firms using the scheme said they could provide at least 20pc of employees’ salaries without running into financial difficulty. One in four said they cannot afford to pay any amount – suggesting 250,000 companies may have to make redundancies instead, if the survey is representative of all businesses using the furlough scheme.

A third of British workers are currently receiving state subsidies. Firms claimed £15bn for 8.4m furloughed employees under between 20 April and 24 May, according to HMRC figures, while 2.3m self-employed workers are relying on a separate support scheme at a cost of £6.8bn.

Mr Sunak will unveil the details of the extended furlough scheme this week and is expected to reduce the wage subsidy from 80pc of pay up to a maximum of £2,500 per month to around 60pc. Companies will be ordered ot make up the difference themselves so that workers are not out of pocket.

The scheme has been extended until October but the Chancellor said firms will need to share the cost of furloughed workers’ wages from August.

Source Article

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