Boris told to 'cut furlough payments to 60%' in controversial bid to force workers back

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Boris told to 'cut furlough payments to 60%' in controversial bid to force workers back 1

The comments come after an exclusive poll for the MailOnline showed that a substantial majority of the public are still more concerned about the lethal virus than they are about an economic meltdown. As the economy crashed with the imposition of the lockdown, Number 10 moved quickly to mitigate the financial chaos and hardship unleashed by the health crisis. Chancellor Rishi Sunak announced a package of government support measures, which included paying 80 percent of employees’ wages up to a maximum of £2.500 per month to prevent companies going bust.

Paul Johnson, head of the Institute of fiscal Studies, said that it was now time for the government to think about cutting that support to cover just 70 or 60 percent of wages in order to incentivise people to return to work.

During an online conference that was discussing how to get people back to work, he said: “One of the big questions for government in moving away from furlough policy is the extent to which it is able to do that differentially by sector.

“You might think that the current system of really quite generous payments is appropriate for those sectors that have to remain locked down – so supposing you work in a bar or a restaurant you might think that’s reasonable.”

However, in other areas that payment looked “too generous” and the government should look to ask employers to share more of the costs.

The economic expert explained: “You could, outside of those sectors that are fully locked down, move to some cost sharing – government will pay half of the salary if, and only if, employers pay some fraction of the salary.”

Just over six million people are having their salaries paid through the furlough system, which is costing the Treasury around £8 billion.

The Office for Budget Responsibility has estimated that the scheme could cost £42 billion over three months if as many as 8.3 million people are furloughed at an 80 percent subsidy.

It could cost a further £12billion for each additional month at this level, according to the Resolution Foundation.

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Prior to the conference, the Institute of Fiscal Studies produced a report, in which it claimed many jobs would not survive the pandemic.

The main business sectors it highlighted as being particularly vulnerable to collapse were hospitality, travel and tourism.

It noted that high street shops were already facing an uphill battle to continue trading, while a “shake-out” of the airline industry was already likely.

The report added that it would take a long time for demand in air travel to recover, if indeed it does at all.

The report comes as the future of many airline companies hangs in the balance, as they reel from the devastating economic impact of the pandemic.

In recent days and weeks, a spate of redundancies have been announced by some of the world’s biggest and most well-known airlines.


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