Westminster ‘putting straight jacket on Wales’ with end of furlough scheme

Rishi Sunak. Picture by Chris McAndrew (CC BY 3.0).

UK Government Chancellor Rishi Sunak is putting a “Westminster shaped straight jacket on Wales” by tapering off the coronavirus furlough scheme, a Welsh MP has said.

Ceredigion MP Ben Lake said that the Chancellor was ignoring regional and sectoral vulnerabilities by announcing cuts to Covid support schemes.

Labour have also warned against a “one size fits all” approach to different sectors.

The UK’s coronavirus furlough scheme will then finish completely at the end of October, the Chancellor confirmed today.

Rishi Sunak has previously announced that he will cut the furlough scheme from 80% to 60% of a persons salary being financed by the Government.

From August, employers must pay National Insurance and pension contributions, then 10% of pay from September, rising to 20% in October.

Ben Lake MP said that while there is a growing “debt burden” for businesses withdrawing support “is like opening a trapdoor underneath them”.

“The Chancellor risks undermining the hard work that has been done to save many jobs during this pandemic,” the Plaid Cymru MP said.

“Companies are facing a growing debt burden and many are clinging on by their fingernails. Some businesses may not even be out of lockdown when the Chancellor starts to bring the furlough scheme to an end. They simply will not survive.

“It is disappointing that the Chancellor failed to recognise regional and sectoral differences, let alone the fact that the status of the outbreak in London is not the same as the current situation in Wales.

“Businesses in Wales may well need support for longer due to the way in which the outbreak has progressed across the UK, and certain sectors, such as tourism and hospitality, need support to ensure that they are able to survive the loss of a large portion of their season.

“The Chancellor needs to remember that he acts as the Chancellor for the four nations of the UK, and that an approach that suits the needs of London will not necessarily work for Wales. For the sake of public health and the health of our economy, we must not see a rushed end to these vital measures.

“In effect, the Chancellor has imposed a Westminster shaped straightjacket on Wales.”

‘Generous’

Under Friday’s changes, furloughed workers will continue to get 80% of pay until the end of October, but by then a fifth of their salary will have to be met by employers.

“Then, after eight months of this extraordinary intervention of the government stepping in to help pay people’s wages, the scheme will close,” Mr Sunak said.

Asked if he would “switch the furlough scheme back on” in the case of a second peak in cases and the reintroduction of lockdown measures, the chancellor said the scheme “as it stands in a national way, in the way that it is designed” will end in October.

“Eight months, as I said, is I think a generous and long period of time,” he said.

Employers’ claims under the scheme have reached £15bn so far, however the scheme is expected to cost a total of around £80bn, or £10bn a month.

The Office for Budget Responsibility is set to publish detailed costings next week.

‘One size fits all’

Labour welcomed the changes to coronavirus income support schemes announced today by the Chancellor – but warned the government against a ‘one size fits all’ approach.

Commenting on these changes, Anneliese Dodds said: “It is welcome that the government has heeded Labour’s calls for a more gradual introduction of the employer contribution to furlough, the introduction of flexibility within furlough to allow part time working, and the extension of the self-employed scheme.”

But the Shadow Chancellor expressed concern that a “one size fits all approach” was being adopted to coronavirus support programmes over the coming months despite the varying impact on different sectors.

“However, it is concerning that there is no commitment within these plans for support to only be scaled back in step with the removal of lockdown. Nor is there any analysis of the impact on unemployment of a ‘one size fits all’ approach being adopted across all sectors.

“The Chancellor must publish the evidence behind these decisions to provide reassurance that his proposals won’t cause an additional spike in unemployment, and an even more difficult economic recovery from this crisis.”

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William Glyn THOMAS
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William Glyn THOMAS

Glyn Thomas 16 mins · Not all Brexiteers are stupid, I have avoided making such a declaration as I have no wish to cause offence but we have reached or perhaps passed the point of no return where we need to take back control. A well-known phrase to us all. The manner in which this government has taken back control is to the detriment of the average citizen. In the UK there are some citizens who consider themselves to be elite and they want to control the way they are taxed or NOT taxed as the case may be. Some… Read more »

Jonathan Gammond
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Jonathan Gammond

On the other hand should the Government be spending money supporting businesses whose products damage the environment or our physical or mental health, or those which exploit people here or abroad. Do we really have that much money that we can afford to subsidize destructive businesses when there are opportunities to spend the money constructively for the benefit of more people now and future generations?

Dr Davies
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Dr Davies

I’m actually surprised at how generous the furlough scheme has been

Dr Davies
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Dr Davies

I’m surprised at how generous the furlough scheme has been

Dan Mac
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Dan Mac

The furlough scheme is a good idea . But too expensive. Does not encourage people to return to work. I don’t understand how millions of people are furlooghing but lots of supermarket are short of staff. Surely people should be encouraged to take another job rather than sit at home on furlough in the hope they have a job to go back to. Is it easier to sit at home and let tax payer pay…hang on isn’t that just like being on benefits?

Rachael
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Rachael

Dan my husband is on Furlough, his employer has instructed him to not take on an additional job- if he does he will be dimissed. This is because their business could reopen at anytime and he needs to be available. As it is currently it looks like he will return to work in July – which he is looking forward to – as he loves his job. In comparison to the bailout the banking sector received in 2008 the furlong scheme is cheaper and will benefit the overall economy more evenly.

Keith Evans
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Keith Evans

What would encourage people to go back to work would be a grown up government making decisions based on science ,rather than placating their base!

pete
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pete

We are all going to pay for this it sounds like charity it won’t be long the government will find a way to recover this money, what they are planning to do with employers to start part paying it’s going to be a stalemate , Employers now of small business have no income so how are they to pay in future months this will lead to people being forced back early to work or lose their jobs due to the business folding under.