MPs have urged Chancellor Rishi Sunak to extend the Coronavirus Job Retention Scheme (CJRS) to help avoid mass redundancies.
The CJRS is set to be wound down in October and changes were implemented to reduce the amount paid by the government from August. From the first week of August, employers had to start paying national insurance and pension contributions. For September and October, government contributions will be reduced to 70% and 60% respectively.
Experts have warned that there are a number of characteristics of the coronavirus (COVID-19) pandemic which indicate that unemployment is going to rise higher than it did at the time of the previous recession in 2008.
MPs recognised that the government faces ‘a daunting challenge’ in maintaining a balance between preventing a rise in unemployment but allowing labour market flexibility to enable workers to move from shrinking to growing sectors of the UK economy.
Commenting on the issue, former Chancellor Philip Hammond said: ‘There is always a tension with the desire to protect employment, so there will be a tremendous political pressure in this recovery to not let people become unemployed and to not let companies fail.’
In related news, it was announced today by HMRC that UK businesses have voluntarily returned more than £215 million in overclaimed Coronavirus Job Retention Scheme (CJRS) payments. Around 80,433 firms have returned furlough funds they were given to help cover employees’ salaries although the government believes as much as £3.5 billion in CJRS funds may have been paid out in error or to fraudsters.
Commenting on the issue, HMRC stated: ‘HMRC welcomes those employers who have voluntarily returned CJRS grants to HMRC because they no longer need the grant, or have realised they’ve made errors and followed our guidance on putting things right.’