UK furlough scheme ends amid calls for further support

The UK's furlough scheme closes on Thursday, but some badly-hit sectors are saying support should continue.

Furlough was introduced in March 2020 and helped pay the wages of 11.6 million workers after Covid-19 forced large parts of the economy to close.

The chancellor said he was "immensely proud" of the scheme, but that it was the right time for it to close.

While the policy, officially known as the Coronavirus Job Retention Scheme, or CJRS, has been widely praised for protecting millions of jobs, firms in sectors where business has still not returned to normal say they need further support.

Mark Andrew, the director of Animal Aircare, which helps pets travel overseas via Gatwick Airport, said some of his staff may be made redundant if business does not start to pick up.

The firm has not yet had to lay off staff, which Mr Andrew said was "purely down to furlough".

"Furlough ending means there's a real question mark for our business. We're still waiting for Gatwick to pick up... it seems the airline industry is not buoyant enough yet," he said.

The number of workers on furlough has fallen steadily this year as lockdown restrictions eased and businesses reopened but the latest figures available showed around 1.6 million remained on the scheme in July.

Under the scheme, the government paid towards the wages of people who could not work, or whose employers could no longer afford to pay them, up to a monthly limit of £2,500.

At first it paid 80% of their usual wage, but in August and September it paid 60%, with employers paying 20%.

The scheme has cost the government almost £70bn, but has been praised by the Resolution Foundation think-tank as a "great success".

Dan Tomlinson, senior economist at the Resolution Foundation, said: "Furlough has been as critical to fighting the Covid crisis as nationalising the banks was to fighting the global financial crisis - and it has been even more important in terms of protecting people's living standards."

But its recent research suggested that a small rise in unemployment was a "real risk" for those still on the scheme as it ends, particularly older workers or those in the travel sector.

International travel has been particularly badly hit by the pandemic, with an evolving array of restrictions and dented consumer confidence affecting business.

For many of those who do return to work as the scheme ends, conditions will not be the same as pre-pandemic.

Jess Pitman was furloughed from her job as marketing manager at a travel firm two weeks after the scheme was introduced.

The company she works for specialises in organising trips abroad to raise money for charities. A trek across the Great Wall of China was one of its best-selling products, but travellers cancelled their plans when Covid hit.

The company's payroll has been reduced from 27 to just five and the 29-year-old will return to work part-time, topping up her income with freelance work.

"I feel really torn about the end of furlough, and I'm really sad for the travel industry as a whole," Jess said.

"I know a lot of people in the industry will be made redundant because of the end of furlough. I think we'll lose a lot of talented people, which is really disappointing."

A spokesperson for the Association of British Travel Agents warned that companies in the sector still face "extreme difficulties" because of travel restrictions.

"The UK's extensive red list [requiring quarantine on return]... is keeping parts of the travel market, such as Latin America and Africa, closed. The specialist travel companies who offer holidays to these destinations have no way of making money," they said.

They called for sector-specific support for smaller firms in particular, who have lost two summers of sales.

"The government needs to look at how it can support these businesses - particularly as the furlough scheme comes to an end - through a package of tailored financial support, including extending business rates relief and a specific grant scheme for travel companies," they added.

The Federation of Small Businesses (FSB) also cited concerns over a "colder environment" for business.

Employers and workers alike will have to cope with the end of the furlough scheme, as well as the scrapping of an incentive for hiring apprentices, rising energy bills and the planned cut to Universal Credit in October.

Mike Cherry, national chair of the FSB, said: "The removal of some of the support measures brought in to hold off the worst effects of the pandemic on businesses will be tough for many to navigate."

However, the Treasury said generous support was being provided through its "Plan for Jobs" which it said was part of a £400bn spending package.

Chancellor Rishi Sunak said: "I am immensely proud of the furlough scheme, and even more proud of UK workers and businesses whose resolve has seen us through an immensely difficult time.

"With the recovery well underway, and more than one million job vacancies, now is the right time for the scheme to draw to a close.

"But that in no way means the end of our support. Our Plan for Jobs is helping people into work and making sure they have the skills needed for the jobs of the future."