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The UK government should consider a specific extension to its licensing scheme, MPs have said.
The coronavirus crisis risks massive long-term unemployment and viable businesses could sink without support, the Treasury Select Committee warned.
However, a general retention of the scheme would not be value for money, he added.
The Treasury said it will “continue to innovate to support income and employment.”
The Coronavirus Job Retention Plan will end on October 31. Under the plan, licensed workers have received 80% of their salary, up to a maximum of £ 2,500 per month.
At first, all of this was paid for by the government. But companies had to start making a contribution to wages in September when the scheme began to be scaled down.
Prime Minister Boris Johnson has previously said that extending the license until October would only keep people “on hold.”
Chancellor Rishi Sunak also ruled out an extension, saying instead that companies will receive £ 1,000 for each unlicensed worker still on the job at the end of January.
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But committee chair Mel Stride said the chancellor “should carefully consider specific extensions” to the plan.
“The key will be to help those companies that, with additional support, can overcome the crisis as sustainable companies, rather than focusing on those that, sadly, will not be viable in the changing post-crisis economy.”
Pay and skills
In the second report of its investigation into the economic impact of Covid-19, the committee also warned that the pandemic risked widening the gender pay gap due to differences in hours of paid work in the confinement, especially if the work patterns are permanently changed.
MPs also said that people should be able to retrain and that small businesses should be able to fully participate in the government’s Kickstart Plan, which aims to create youth jobs with universal credit.
The trade body of the Federation of Small Businesses (FSB) said that with the suspended licensing scheme, “lawmakers will need to keep a close eye on measures to stop mass unemployment, including a successor scheme.”
FSB National President Mike Cherry said: “The priority should be to protect viable small businesses, and all the jobs they provide, which have been disproportionately [hit] due to the coronavirus crisis, including those trapped by local closures, subject to ongoing national restrictions, or with personnel who have suffered directly from Covid. “
The Resolution Foundation, which campaigns on living standards, said that “extending support to the worst affected sectors of the economy will be essential to limit the rise in unemployment Britain faces in the coming months.”
Torsten Bell, executive director of the think tank, said: “This authoritative account of the economic impact of the coronavirus should be a required reading for Treasury officials planning the Fall Budget in the highly uncertain context of the increase in the number of cases of coronavirus.
“The chancellor will have to reconsider his plans to quickly remove support given the painful reality that the economic crisis is here to stay.”
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This week, major business groups warned that the UK risks a second wave of job cuts and a slower economic recovery if it does not extend its licensing plan.
Germany, Belgium, Australia and France have decided to expand or launch new salary support plans next year.
A Treasury spokesman said that by the time the UK plan closes, it will have helped pay for 9.6 million jobs.
“We will continue to innovate to support income and employment,” the spokesperson said.
“We are helping employees get back to work, where they want to be, through a £ 1,000 retention bonus.
“And we are creating new roles for young people with our Kickstart Scheme, creating incentives for training and apprenticeships, and supporting and protecting jobs in the tourism and hospitality sectors through our VAT reduction and the Eat Out to Help Out scheme of the last month”.
The UK unemployment rate has been 3.9% since the lockdown was introduced.
But the Bank of England expects that rate to double to 7.5% before the end of the year in which the government-funded support plans end.
Companies like Rolls-Royce, Costa Coffee, Pret A Manger, Pizza Express, British Airways and BP have already announced thousands of job cuts.
