Rishi Sunak hints at more jobs support as unemployment crisis deepens

Linda J. Dodson

The official unemployment rate rose for the first time since the pandemic struck, climbing marginally from 3.9pc to a two-year high of 4.1pc. But economists expect the furlough-distorted figure to soar much higher as the scheme is withdrawn.

Following the gloomy figures, ministers boosted hopes they will intervene to stop unemployment soaring in the coming months.

“I hope that he will be reassured that throughout this crisis I have not hesitated to act in creative and effective ways to support jobs and employment and will continue to do so,” Mr Sunak said in response to a question from Treasury Committee chair Mel Stride.

Employment minister Mims Davies also hinted at more support for jobs, acknowledging that “there will be sectors that will take longer to come back”.  

She added: “I don’t think this Government is afraid of supporting where we can. Obviously we have got the fiscal events where the Chancellor can start to look at that going forward.” 

The Chancellor’s job retention scheme has kept the labour market in a state of suspended animation, paying 80pc of furloughed workers’ wages at up to £2,500 per month. Almost 10m workers have relied on the scheme.

However, the full blow of Covid to jobs will not be clear until the end of the Chancellor’s wage support. July was the final month before firms were asked to contribute to the cost of employees, with the scheme ending in October.  The Chancellor has announced a “Plan for Jobs” to bolster the labour market but opposition MPs and industry leaders have warned much more support is needed.

Labour leader Sir Keir Starmer today called for “new targeted support” to replace the furlough scheme for “those sectors that most need it”.

“It makes no sense at all for the government to pull support away now in one fell swoop,” he warned. 

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