Saturday 10 July 2021 9:30 am

Exclusive: London faces ‘furlough cliff edge’ with Newham, Haringey and Brent to suffer most

London workers are amongst the hardest hit by the pandemic onslaught, with four London boroughs featuring in the top five areas in the UK that are most reliant on furlough.

The London borough of Newham has 18 per cent of its working population on furlough and is second out of 369 ranked county or district authorities in the UK, according to research from UHY Hacker Young, shared with City A.M. this afternoon.

Haringey, Brent, and Hounslow are joint third with 17 per cent of their respective working populations furloughed. All have been severely impacted by the closure of hospitality and retail businesses over the past year, where home working is impossible.

The data has also showed that other London areas are highly dependent upon furlough, with an average rate of 14 per cent of London’s working population on furlough, compared with 12 per cent nationwide.

Winding down

Since the 1 July, the government has dropped its contribution to furloughed employees salaries to 70 per cent of their pre-Coronavirus total.

From 1 August, this contribution decreases further to 60 per cent of the employee’s salary, with employers required to contribute 20 per cent, up to £625 per month. With the scheme set to end entirely on 30 September, many London workers will be put at risk of redundancy.

London is likely to be worst hit by a rise in unemployment, particularly for younger people, who are overrepresented in retail, according to the research.

The data also raises concerns that the poorest will suffer most from the end of the furlough scheme. The four London boroughs named as some of the most dependent on furlough are also some of the most deprived areas in the country. In Haringey, 34 per cent of the population was said to be living in poverty in 2018/19.

UK Local authorities ranked by worker dependence on furlough as of 30 April
County and district / unitary authorityTotal employments on furlough on 30 April
Total take-up rate
on 30 April
South Lakeland8,70019%
Newham (London)28,20018%
Haringey (London)21,90017%
Brent (London)25,20017%
Hounslow (London)21,80017%

These areas could fall even further behind if these financial assistance measures for local businesses are not extended beyond the end of September, warned Martin Jones, Partner at UHY Hacker Young.

“Younger and lower-income people in London have already been hit hardest by the economic effects of the pandemic. That’s only going to get worse when we hit the furlough cliff-edge,” Jones said.

“It is ironic that even though hospitality is currently struggling to fill vacancies, many furloughed staff are worried about their job security,” he told City A.M.

“The government may even need to extend the furlough scheme deadline until the end of the year in order to protect the hundreds and thousands of jobs on the line,” he added.

In March, the Government extended the furlough scheme to September of this year due to a third national lockdown and concerns that an end to the scheme would result in large scale unemployment. Calls for another extension are likely to grow in volume as the end of September quickly approaches.