Labour Market

Extending furlough scheme “delays readjustment to changed economy”, says IEA expert

Professor Len Shackleton responds to the Chancellor's announcement on the furlough scheme

Responding to the Chancellor’s announcement on the future of the Coronavirus Job Retention Scheme, Professor Len Shackleton, IEA Editorial and Research Fellow, said:

“The Chancellor’s announcement today will tend to keep businesses tied to government funding for longer than strictly necessary and delay readjustment to what is a greatly changed economy.

“The intention to make the Job Retention Scheme more flexible is welcome but waiting until August before asking businesses to begin sharing the cost of furloughing, and encouraging employees to return to work at least part-time, means billions of pounds extra taxpayer spending. It will also probably lead unions and other groups to insist on yet more extensions as the summer rolls on.

“The longer businesses are dependent on the furlough scheme, and unable to begin reorganising staff and adjusting their business models, the less likely it is that people will have jobs to return to once the lockdown ends. It will also delay individuals’ plans to seek other jobs where this is clearly going to be necessary.

“It would have been better to spell out much more clearly what the government intends now, rather than delaying the detail of what Mr Sunak proposes.”
Notes to editors

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For further IEA reading on the Coronavirus Job Retention Scheme click here and here.

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