'Thousands face cliff edge as furlough support ends'

Nearly 4,000 workers in the city are still receiving support, triggering concerns that the city's recovery will slow down once furlough payments expire at the end of September.

York Liberal Democrat councillors say the withdrawal of the scheme, together with the forthcoming end of the £20-a-week Universal Credit uplift and a National Insurance rise, will see thousands of local families face untold pressure.

Councillor Andrew Waller, Lib Dem executive member for economy and strategic planning, also warned that efforts to find work for people could be 'stretched to breaking point if there is a large jolt to the economy'.

The latest data, published by the Treasury, show that 105,400 workers across North Yorkshire are still receiving furlough payments - including 3,900 in York, as of July 31.

In total 36,100 York workers have been supported by the scheme since it was introduced in March 2020 when the Covid-19 pandemic plunged the country into its first national lockdown.

By the end of July, 1.6 million workers nationally were still furloughed, down from almost two million a month earlier but a slower decline than in previous months.

As a result of the slowing down of the national recovery and impact of Brexit, it is estimated that up to a million employees could still be on furlough when the scheme closes at the end of this month.

Cllr Waller said: "Whilst we are seeing very positive signs of local recovery, these furlough support figures, the recent GDP growth rate and ongoing issues in the supply chain show the economy is far from being out of the woods yet.

“The furlough scheme has been crucial to our joint efforts to protect jobs and livelihoods of local residents, with companies being able to flexibly utilise the scheme as they work to return back to their normal business model.

“There is danger that the cliff edge for furlough support could see unemployment rise, so there needs to be clearer support for individuals to retrain, and change careers without losing income whilst doing so.

"Strenuous efforts are being made within York to match vacant posts with people looking for work and require re-training, but this will be stretched to breaking point if there is a large jolt to the economy.

“Hard-pressed families face a triple whammy with the end of furlough, the scrapping of the Universal Credit uplift and the unfair National Insurance tax hike. It's too soon for the Government to be pulling the plug on vital support for struggling households and businesses without any comprehensive career transition or welfare support in place.

“It is the time for the Chancellor to appreciate the real extent of the challenges facing businesses and workers and put in place adequate support, giving thousands of local households and businesses the security they need.”

Rachael Maskell, Labour York Central MP, said: "The Coronavirus Job Retention Scheme has supported businesses and maintained jobs over the last 18 months, which has been a lifeline to many families, however the Government are set to end the scheme at the end of this month.

"While some businesses have been quick to recover, others are struggling. The  travel sector are only starting to take bookings for next year, charities have yet to recover their lost income, and due to lags in the supply chains, other businesses are not working to capacity.

"With Government removing a number of Covid19 economic protections in close proximity, it is leaving significant uncertainty as to how some businesses will survive.

"Cutting jobs now, will slow down the recovery, and therefore I would ask Government to use transition funding to help businesses get back on an even footing.

"We are far from through this pandemic, and with infection rates continuing to rise, it is crucial that some flexibility remains. Due to timescales, some businesses may have already started the consultation process for job losses.

"Businesses cannot be expected to go on this next phase of the pandemic on their own, Government must also play its part in sustaining the wider economy."

Joining calls for more Government support, Carolyn Frank, development manager at the FSB for York & North Yorkshire, said: "The end of the job retention scheme is a worry to many local businesses, and particularly those micro businesses with one to four employees, which make up the majority of businesses in York, where flexible furlough is currently in place to support them to keep employees with funding from government.

"The difficulty is that not all businesses have made a full recovery yet, so they have very difficult decisions to make right now on whether their head count is still affordable at reduced capacity.

"If they are forced to make someone redundant at the end of the scheme, and business then picks up they will have the expense and difficulty of recruiting again.

"On the flip side, some businesses who are struggling to recruit staff will welcome additional job seekers being on the labour market and the share of firms citing lack of access to appropriately-skilled staff as a barrier to growth has soared to its highest level on record (37 per cent) in the FSB’s latest business confidence survey.

"Recovery overall is positive but there are still many difficulties faced by the smallest businesses that need to be overcome before we could say the economic effects of the pandemic are truly over, and staffing is one of the biggest headaches for them."

She added: "It is very important to reduce, at least in the short term, the cost of hours worked to maintain employment, whilst maintaining wage levels. This would not only support the return of workers from furlough, but give confidence to businesses unsure of the extent of returning demand.

"The mechanism most likely to accomplish this is by a cut to Employer NICs. Employer NICs dis-incentivises both retention and recruitment and cutting Employer’s NICs would play an important role in enabling both, so last week's announcement of an increase is extremely disappointing and combined with the end of the JRS will undoubtedly stifle recovery."

* Is your business facing difficult decisions? To share your story, contact our Business Editor Nadia Jefferson-Brown by emailing nadia.jeffersonbrown@thepress.co.uk

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