Labour calls for ‘smart’ extension and overhaul of furlough scheme
An indefinite extension and radical reform of the government’s flagship furlough scheme is urgently needed to save Britain from an unemployment crisis, the shadow chancellor, Anneliese Dodds, will say on Friday.
Amid fears that the Treasury will unwind support for the economy too quickly, Dodds will call for a “smart” extension of Rishi Sunak’s wage subsidy programme as part of an emergency package of measures.
Labour’s plan for jobs, seen by the Guardian, involves action to prolong and improve the furlough scheme, together with measures to help young people find work and steps to create hundreds of thousands of “clean, green” jobs.
Closed doors and lives in limbo: young Britons face Covid jobs crisis
Dodds will insist that Sunak, the chancellor, should not wait until the budget on 3 March to announce that the furlough – due to be wound up at the end of April – will remain in force for as long as health restrictions are in operation.
She will say the UK could learn from Germany, France and the Netherlands, which have all included incentives and conditions in their furlough schemes to encourage job retention and training and to prevent abuse.
Sunak is weighing up whether the speed of the UK’s vaccine programme will enable lockdown curbs on activity to be relaxed quickly enough to stick to plans to end the furlough – which has cost the government about £50bn so far – in less than three months’ time.
Business groups including the British Chambers of Commerce have called for a time-limited extension of the furlough until the summer, while the TUC has said it should remain in place until the end of the year.
The shadow chancellor will say, however, that the furlough’s length should not be pre-determined but should depend on the state of the economy. Labour also wants action to accelerate the government’s flagging Kickstart scheme for unemployed young people, under which only 2,000 placements have been made, and to make good on unfulfilled promises to link job creation to the fight against global heating.
“Rishi Sunak’s plan for jobs has been a disaster,” Dodds will say. “Seven months after its launch, we’ve got record redundancies, soaring unemployment and the worst economic crisis of any major economy.
“We need urgent action to secure, recover and create jobs. This must include a smarter furlough scheme, an overhaul of the failing Kickstart youth programme, and reform of the shambolic green homes grant as part of wider action to ‘build it in Britain’ and support the creation of 400,000 clean, new jobs.
“People can’t afford to wait for the chancellor to get his act together. They need emergency action today, not more dither and delay until the budget.”
The latest figures from the Office for National Statistics show that 18% of workers in UK businesses that have avoided going bust during the lockdowns of the past year are now on furlough. Dodds believes many of the 4.6 million workers now having part of their regular wages paid by the state will continue to need help well beyond April, because some sectors will remain affected by social distancing and others will take time to recover from months of disruption.
In order to avoid a damaging cliff edge, Labour is proposing there should be a revenue test so that firms that can demonstrate they are still hard-hit even after restrictions have been lifted can continue to access the scheme.
Labour’s proposals involve employers being rewarded if they enable furloughed staff to access specific, accredited training. Dodds said French, German and Dutch schemes all incentivised training already, while the UK furlough did not.
The Organisation for Economic Co-operation and Development – the Paris-based thinktank for developed nations – has recommended that when unwinding furlough schemes governments should gradually shift the emphasis from protecting jobs to supporting vulnerable workers, with a focus on improving their skills.
Dodds said a minority of firms were abusing the furlough, and those taking part should have to abide by certain conditions:
Treat their staff well: no firing and rehiring.
Suspend dividend payments for the duration of the scheme and suspend excessive executive renumeration.
Firms above a certain size would commit to publishing a strategy on how they were reducing their carbon footprint and contributing to the transition to net zero.
A commitment to tax transparency, for companies above a certain size.
Sunak’s plan for jobs included a £2bn green homes grant to make UK homes more energy efficient while supporting the creation of 100,000 jobs. Dodds said businesses were reporting that they were laying off staff after being left out of pocket by the government.
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