Rishi Sunak urged to consider 'targeted extension' to furlough scheme

A cross-party group of MPs have thrown their weight behind calls for an extension to the job retention scheme to provide support to struggling sectors.

In a new report, the Treasury Select Committee warned "sustainable" firms could go bust due to the impact of social-distancing as they called for ministers to offer further financial backing.

The furlough scheme, which has so far paid out over £35.4bn in support to workers, is due to end on 31 October.

Prime Minister Boris Johnson has repeatedly dismissed calls to extend the wage scheme, saying it kept workers in "suspended animation".

Instead, chancellor Rishi Sunak has offered firms a £1,000 bonus for every furloughed employee still in their roles at the end of January.

But Conservative MP Mel Stride, who chairs the Commons committee, said ministers should "carefully consider targeted extensions" to prevent avoidable job losses.

"The committee's disappointment that the government did not implement our recommendations to help those who have fallen through the gaps in support persists," he said.

"Our second report of the inquiry focuses on emerging challenges as lockdown measures are lifted.

"One such challenge is to target assistance effectively at those businesses and individuals who need it. The chancellor should carefully consider targeted extensions to the coronavirus job retention scheme and explain his conclusions."

He added: "The key will be assisting those businesses who, with additional support, can come through the crisis as sustainable enterprises, rather than focusing on those that will unfortunately just not be viable in the changed post-crisis economy."

The group also called on the government to set out plans within three months to ensure small firms could pay back loans taken out due to the pandemic without impacting recruitment and growth.

The report's recommendations have received the backing of trade unions and thinktanks, with TUC general secretary Frances O'Grady saying the chancellor should extend the scheme beyond the October deadline.

"The TUC has set out a new plan for a job retention and upskilling scheme supporting short-time work," she said.

"The chancellor must act quickly and decisively to put a scheme in place before unemployment surges."

Torsten Bell, the chief executive of the Resolution Foundation, added: "This authoritative account of the economic impact of coronavirus should be required reading for Treasury officials planning the autumn budget against the highly uncertain backdrop of rising coronavirus case numbers.

"The chancellor will need to reconsider his plans to swiftly phase out support given the painful reality that the economic crisis is here to stay."

Responding to the report, a Treasury spokesperson said they would "continue to innovate in supporting incomes and employment through our Plan for Jobs".

"We're helping employees get back to work, where they want to be, through a £1,000 retention bonus," they added.

"And we are creating new roles for young people with our Kickstart Scheme, creating incentives for training and apprenticeships, and supporting and protecting jobs in the tourism and hospitality sectors through our VAT cut and last month's Eat Out to Help Out scheme."