Fresh fears of an “unemployment crisis” in Coventry have been raised as an MP hit out at the government for their “reckless winding down” of the furlough scheme.
The Coronavirus Job Retention Scheme was introduced at the start of the pandemic, with the government paying 80 per cent of an employee’s salary to prevent redundancies where people were unable to work.
Since August, employers have been asked to pay National Insurance and pensions contributions and since the start of this month employers have had to start paying at least 10 per cent of people’s salaries, with the government providing 70 per cent.
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The rules will change again in October, when employers will have to pay at least 20 per cent of their furloughed staff’s salary. The scheme will then close entirely at the end of October.
But there are fears this could lead to a spike in unemployment.
Zarah Sultana, MP for Coventry South, criticised the government’s decision to bring the furlough scheme to an end.
Trade unions and business groups have called on the government to extend the scheme for industries still affected by the Covid-19 crisis.
The Institute for Public Policy Research thinktank has warned that ending the furlough scheme with nothing to replace it will cause unemployment levels “not seen since the Great Depression of the 1930s.”
What did Ms Sultana say?
Speaking at a Business of the House session in the House of Commons yesterday, Thursday, September 3, Ms Sultana said: “Manufacturing industries in Coventry and across the West Midlands have been hit particularly badly by the coronavirus pandemic.
“If the Government continue with their reckless, one-size-fits-all winding down of the furlough scheme next month, I fear that we will see an unemployment crisis not witnessed in the city in decades, so will the Leader of the House grant Government time to discuss the urgent need for economic support for manufacturing industries in Coventry and how we can take this moment to invest in the green technologies of the future?”
Jacob Rees-Mogg, Leader of the Commons, declined the request.
He said: “The Government have provided an unprecedented level of support for the economy, but that support cannot continue indefinitely.
“There has been a crisis, and the response to that has been to maintain the structures of the economy.
“I have given some of the figures. Let me give some more: £35 billion in more than 1 million bounce-back loans; £11 billion in business grant and £10 billion in business rates relief; £27 billion in VAT deferrals, supporting nearly half a million businesses: £33 billion in the summer economic update supporting the jobs retention bonus; and eat out to help out, which has seen 84,000 firms claim £336 million.
“What the Government have done is absolutely right to protect the structure of the economy as the V has gone down as demand was stopped by Government order.
“What the Government and the taxpayer cannot do is continue this forever, because ultimately, as socialists always forget, you run out of other people’s money.”
Speaking after the debate, Ms Sultana said: “Many industries are still badly affected by the coronavirus pandemic. If the Government pursues its reckless one-size-fits-all winding down of the furlough scheme, unemployment will skyrocket in Coventry and across the country.
“The French and German governments have extended their schemes. Now workers in Coventry need our Government to step-up and extend the furlough scheme for the industries that need it.
“The scheme isn’t cheap, but those with the broadest shoulders should pick up the bill, not workers who have already suffered a decade of stagnating wages and cuts to public services.”