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Chancellor Rishi Sunak has been urged to extend the coronavirus wage subsidy scheme until September to avoid the spiral of job losses in Britain this summer.
In a context of mounting pressure on the government to provide continued support as closure measures are phased out, the Resolution Foundation said the extension would cost the treasury up to £ 48 billion, but would prevent a further increase in unemployment.
After Boris Johnson announced its plan for the gradual lifting of restrictions on Sunday, industry groups warned it was incomplete without urgent details about the job retention scheme.
Lex Butler, president of the Association of Hotel Reservation Agents, said: “We immediately need to know that the licensing plan will extend beyond the end of June and on what terms. We need clarity now to avoid large-scale closings and job losses. ”
Hotel sector employees are expected to return to work last, possibly from July.
Adam Marshall, CEO of the British Chambers of Commerce, said: “Businesses will need to know that government support schemes, which have helped save millions of jobs in recent weeks, will continue as long as necessary so they can plan ahead. with trust “.
Johnson told parliament Monday that Sunak would announce details of the future of the licensing plan on Tuesday. The chancellor is expected to announce the gradual liquidation of the plan amid growing concern about its cost, which is about £ 14 billion a month.
Under the scheme, workers receive 80% of their salary up to £ 2,500 per month. More than 6 million were protected in 800,000 companies in the first two weeks of operation of the scheme.
It is understood that the options the Treasury is considering include reducing the level of support to 60% and allowing staff to work some of their hours.
The Resolution Foundation urged the government to allow “partial suspension” from early June, but said 80% support should also be maintained throughout the economy until at least August. Then it could be gradually reduced.
However, Thinktank recommends 80% continued support through at least September for companies in sectors where returning to work will take the longest, including hospitality.
Sunak is under pressure from business leaders to provide an update this week because employers have to allow at least 45 days to consult about the layoffs of more than 100 employees. Companies face a deadline of May 18 to begin the redundancy consultation process if the permit is no longer available in July.
Torsten Bell, executive director of the Resolution Foundation, said: “Moving too fast could lead to a second huge increase in job loss at a time when unemployment already appears to be at the highest level for a quarter century.
However, the scheme cannot last forever. It should be phased out, with a longer deadline for the worst affected sectors. “
On Sunday, Johnson said it was time for sectors where it was not possible to work from home, including manufacturing and construction, to return to work.
But the British Confederation of Metal Forming (CBM), which represents some 200 manufacturing companies in Britain, said the economy would take longer to recover and more financial support would be needed as production levels remain below normal.
The CBM said that up to 30% of the jobs (12,000) among its members could be cut if assistance were removed in late June.
Financial lobby group TheCityUK said it expected UK companies to face unsustainable debts of up to £ 105 billion that would have to be managed before March of next year.
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Along with continued government support, the Bank of England has directed major high street banks to make more loans to businesses to help them stay operational.
A Treasury spokesman said the job retention scheme had already protected millions of jobs.
“Future decisions on the scheme will take into account the broader context of the measures implemented, as well as the public health response,” they said. “We have been clear that there will be no cliff edge and people will return to work in measured measure.”
