For the Conservative government, the furlough program was a dramatic intervention. It helped pay up to 80 percent of wages for millions of people whose work schedules were cut throughout the pandemic and stopped unemployment spiking higher during lockdowns. By mid-August it had cost nearly £69 billion. At its peak about 9 million people were on the program, nearly a third of Britain’s work force.
The Resolution Foundation, which studies living standards, estimates that about one million people were still on furlough as the program ends. Many analysts expect unemployment to rise even though job vacancies in Britain have climbed to a record high. There is a mismatch between the kinds of jobs that need filling and the skills held by people available to work, creating an unexpected labor market quandary.
But now the Treasury is trying to shore up its finances, looking for ways to raise tax revenue and cut spending. Grants for self-employed workers are also ending on Thursday, and VAT, a type of sales tax, will be increased for hospitality, hotel and leisure attractions. The government is also ending a £20-a-week increase to a major government benefit program, Universal Credit, which will affect more than five million people.
The Joseph Rowntree Foundation, a charity dedicated to ending poverty, is one of many organizations that have urged to the government not end the extra Universal Credit benefit. On Thursday it said the new £500 million fund was an inadequate alternative.
“The support available through this fund is provided on a discretionary basis to families facing emergency situations,” Helen Barnard, the charity’s deputy director, said in a statement. “It does not come close to meeting the scale of the challenge facing millions families on low incomes as a cost-of-living crisis looms and our social security system is cut down to inadequate levels.”