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Unions Warn Rishi Sunak That Delaying New Furlough Risks Mass Unemployment

Business leaders and trade union bosses join politicians, lobby groups, and restaurateurs in telling the government to extend its support schemes. Now

Boris Johnson Holds Virtual Press Conference
Rishi Sunak is under pressure to continue wage support scheme after England’s prolonged coronavirus lockdown has kept restaurants and retail closed
Henry Nicholls- Pool/Getty Images

Unions and business groups have warned chancellor Rishi Sunak of mass unemployment if the wage support furlough scheme is not extended beyond the end of April.

Businesses, such as restaurants and pubs, which have made it through 10 months of the pandemic now find themselves in lockdown facing the possibility of the expiration of a whole package of support schemes in the next two months. Industry leaders and worker representatives are today saying that for businesses to plan, and to avoid having to cut jobs before going bust, the government must manage their uncertainty with a swift announcement that further support is forthcoming.

As reported by the Guardian, TUC general secretary Frances O’Grady said the chancellor should act now and not wait until the budget, scheduled for 3 March, four weeks from now. “It would be a dereliction of duty of any government [not to extend the wage support scheme, in place since last March],” O’Grady said. “The government must understand we need to work our way back to growth, and for that we need people in jobs. Otherwise we are going to end up with real, deep economic and social problems.”

It echoes calls this week from hospitality sector trade bosses and from restaurateurs themselves that the government must soon announce an extension to its various financial support measures in order to avoid mass business failure before venues are reopen after lockdown. The Labour party, too, has said that the government must act urgently or risk the closure of 650,000 hospitality venues across the U.K.

That same call for urgent action was issued by Rain Newton-Smith, chief economist at lobby organisation the Confederation of British Industry’s (CBI) who said extending furlough was a central pre-budget demand of the group. An announcement should be made “sooner rather than later,” she said. Given progress on the vaccine roll-out, “If the government brought it to a sudden stop, that would almost certainly impact job decisions, just as we see hope on the horizon,” Newton-Smith told the Guardian.

Employment figures throughout the pandemic have always shown hospitality to be one of the first and worst-hit sectors. As of November last year, 600,000 hospitality jobs were furloughed, while between February and November at least 300,000 jobs were lost. An estimated 10,000 licensed businesses, again, likely at minimum, closed in 2020.

The Guardian also reports that government’s own economic forecaster, the Office for Budget Responsibility (OBR) warned that unemployment could “spiral” upwards after furlough ends, forecasting that it could hit 2.7 million by the summer, more than double pre-pandemic levels.

With that, and knowing that the current expiration dates on support schemes were decided before it was known lockdown would be in place for the whole of the first quarter of 2021, there are some obvious but important things to remember: Rishi Sunak does not want over half a million hospitality venues to close down, no more than he wants to see 2.7 million people unemployed, especially since his policies since last March have been designed to prevent precisely this. But all too soon he will surely realise that unless he acts to support businesses and workers on the final stretch of the long, arduous, and uncertain road through the pandemic, then this is the very economic omnishambles he’ll be tasked with rectifying. Why then come this far, only to “drop the baton”? But, as many businesses throughout the last year have found to their detriment, it’s not just a case of acting and issuing support but about doing those things at the right time. Put simply, before it’s too late. From every direction, Sunak is being told to extend support and to extend support now.

Given the basic economics, one has to assume he will. But only time will tell if he acts soon enough.