The furlough scheme cost the government £70bn and has been successful at preventing unemployment from skyrocketing, but concerns are sharpening about the jobs market’s ability to stand on its own two feet as the scheme ends this week.
The initiative cost roughly the equivalent of 18 months’ of funding for UK schools, according to research by the Resolution Foundation (RF).
Across the scheme’s lifetime, it has covered the wages of 11.6m people and paid for 2.3bn working days.
Furlough rates have tumbled as Covid-19 restrictions have eased and the economy has reopened. Latest data from the Treasury shows 340,000 people left furlough in July, pushing the number down to 1.6m the lowest since it was launched.
Dan Tomlinson, senior economist at the resolution foundation, said: “Furlough has been as critical to fighting the Covid crisis as nationalising the banks was to fighting the global financial crisis – and it has been even more important in terms of protecting people’s living standards.”
However, the RF warned elevated furlough rates means “the risk of a rise in unemployment and inactivity when the scheme closes is still real” after the scheme ends on Thursday.
“As we prepare for a post-furlough jobs market this Autumn, hundreds of thousands more workers will be looking for work and older workers in particular face the risk of unemployment and early retirement as they are most likely to still be on furlough,” Tomlinson added.
“Record levels of job vacancies should hopefully mean this mass job search is relatively short-term, but Britain is set for a bumpy autumn as the end of furlough coincides with rising energy bills and the £20 a week cut to Universal Credit.”
Concerns among Brits about a looming cost of living crisis are mounting, triggered by a potential surge in energy costs, high inflation and tax hikes.
Research by GfK shows consumer confidence dipped five points to minus 13 in September, while separate data from the Centre for Economics and Business Research suggests energy bills will rise more than £300 over the next year.
Britain is currently experiencing an acute energy crisis, triggered by a sharp rise in the cost of wholesale natural gas as a result of severe shortage of the resource.
The UK has been hit hard by the natural gas price hike due to the resource making up a large proportion of the country’s energy mix. Several energy providers have collapsed as a result of firms being unable to absorb higher wholesale energy costs, with an estimated 1.5m customers affected.