Wednesday 17 June 2020 7:44 pm

Half of businesses set to lay off staff once furlough ends

Save our SMEs

More than half of all UK businesses will be forced to lay off staff within three months once the government’s furlough scheme ends, a new poll has revealed.

According to YouGov data, 31 per cent of business leaders said a fifth or more of their staff could go, while 21 per cent said almost a third or more.

Read more: Workers on furlough pass 9m as cost of job support measures nears £30bn

The Treasury’s latest figures show that over 9m British workers have been put on the scheme, at a cost of £20.8bn.

A total of 1.1m businesses have applied for financial aid under the scheme.

The job retention scheme is due to come to an end in its original form at the end of July, with an adapted scheme continuing until October.

Businesses have praised the furlough scheme, which has enabled many to avoid making mass lay-offs.

Nearly half – 48 per cent – of respondents said the government’s response to the crisis had been good for business, against 37 per cent who said it had been bad.

Read more: UK unemployment: 612,000 workers lose jobs as vacancies crash to record low in lockdown

Data yesterday from the Office of National Statistics showed that the UK’s unemployment rate had stayed the same for the three months to April, although workers on company payrolls fell 612,000 between March and May.

However, the results of YouGov’s survey of 503 business leaders showed that despite the short-term respite, the long-term risk to the UK job market from the coronavirus crisis remains formidable.

Only a third – 34 per cent – of those surveyed said that they were sure they would not have to make redundancies in the initial time frame.

Before the Open: Get the jump on the markets with our early morning newsletter

Institute of Directors’ chief economist Tej Parikj said that it was essential for the government to find new ways to support employment once the scheme ends, such as lowering National Insurance payments.

“Directors understand that the furlough scheme wasn’t intended to be indefinite, but as it winds down, the government must support employment in other ways”, he said. 

“Reducing the cost of hiring is crucial, the Treasury shouldn’t wait till later in the year to lower the burden on National Insurance costs”.

CBI deputy director general Josh Hardie agreed that the government could not simply turn a blind eye to business once the furlough scheme ends.

Read more: Boris Johnson: Too early to ease two-metre social distancing rule

He said: “The government must continue to keep a watchful eye on industries and employees, ensuring as many good businesses as possible are saved.

“Unemployment typically falls unevenly across society and leaves long-lasting, generational scars. We must look to addressing this by creating inclusive jobs which support long-term sustainable growth”.

The survey also found that one in 10 businesses would not be able to continue operating if staff had to remain two metres apart or keep working from home.

Boris Johnson has come under increasing pressure from many different sides to relax the measures, with the Federation of Small Businesses last week saying that the hospitality industry would struggle unless the measures were relaxed.

Despite the pleas, however, Johnson yesterday said that it was too early to relax the rules, but told companies to “watch this space”.

A Treasury spokesperson said: “The job retention scheme will continue to support businesses until the end of October – with millions of employees benefitting from our help.

Read more: Government faces fresh calls to relax two-metre rule to save hospitality industry

“It’s part of our comprehensive package of support that includes tax deferrals, a £6.5bn injection into the welfare safety net and billions of pounds in loans and grants.

“This survey is based on only 503 businesses, when this week figures show that 1.1m employers are using the scheme.”