While Rishi Sunak’s furlough scheme has been a much-needed and welcome lifeline to many, the sums don’t add up for his plan to pay businesses £1,000 per employee still in work by the end of January (UK business leaders warn over closure of furlough scheme, 8 July).
I currently have 44 employees on furlough, most of whom I will be forced to release from the scheme at the end of August, because there is no revenue to pay the employers’ contribution. But let’s say, for the sake of argument, that all 9 million people currently on furlough are still on it when it ends in October, and their employers can afford to pay them £520 a month for the three months for the period November to January to qualify for the £1,000-per-employee bonus. Employers, many with no other revenue coming in, would be paying out £1,560 per employee to then get £1,000 back. The minimum cost to employers would be £14bn, with the government reimbursing £9bn. What the chancellor is effectively saying is: “If you give me £3, I’ll give you £2 in return.”