New figures show more than one-in-three UK firms now plans to send at least three-quarters of their staff home as the true economic impact of the pandemic becomes clear, with six percent of businesses already facing bankruptcy as a result of the shutdown. The Government’s plan to cover 80 percent of the salary of laid-off workers could cost up to £40 billion in three months as more companies decide to take up the scheme, according tothe Resolution Foundation think tank.
The figures are based on new data from the British Chambers of Commerce (BCC) which show more businesses than first thought would furlough staff.
Resolution Foundation chief executive Torsten Bell said: “The cost of the scheme depends on firms’ take-up and the length of time workers need to be furloughed.
“But with recent surveys implying that at least a third of the private sector workforce could be paid through the scheme, it is likely to cost as much as £30 billion to £40 billion over three months.”
But Mr Bell said the despite the eyewatering figures, the social cost of millions of people losing their jobs in the absence of Government support would be “far, far greater”.
He warned workers would face “catastrophic hits to their living standards” without Chancellor Rishi Sunak’s “bold and ambitious” furlough scheme.
One fifth of companies who responded to the BCC survey are now planning to furlough all their staff, up from 17 percent in the last poll.
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A total of 37 percent of respondents said they will furlough between 75 percent and 100 percent of their workforce in the coming week.
Mr Sunak said: “We have not put out a specific projection or an estimate of the take-up of that scheme.
“We did that so that people were not laid off, they were not unemployed, they had a good income to get them through this, and they remain attached to their company and their employer.
“If it ends up being significantly used I will view that as a success if it means that we get through this and then can bounce back quickly.”
The survey also found that only a small fraction of businesses have been able to get hold of emergency loans to keep ticking over, despite promises that money would start flowing quickly.
Just 1 percent of firms have successfully accessed the Government’s Coronavirus Business Interruption Loan Scheme (CIBLS), which was announced by the Chancellor last month, according to the data.
The results found that 8 percent of the companies that responded had been unsuccessful in their applications.