Chancellor urged to consider extending Job Retention Scheme

A cross-party group of MPs has urged Rishi Sunak to consider ‘targeted extensions’ to the Job Retention Scheme, which is due to end next month (31 October).

In a new report out today (11 September), the treasury select committee said it is not clear that the Job Retention Bonus is good value for money, because it has not been effectively targeted.

But the report adds the chancellor should carefully consider whether a targeted extension of the Coronavirus Job Retention Scheme (CJRS) and other targeted support measures might be required.

It comes as the Joseph Rowntree Foundation (JRF) calls on ministers to introduce a COVID-19 Job Support Scheme – a new temporary and targeted furlough policy measure for businesses that continue to face constrained capacity and reduced demand due to required social distancing measures.

The JRF has warned around 40% of employees on the minimum wage face a high or very high risk of having their job destroyed by COVID-19 compared to less than 1% of those earning more than £41,500 per year.

The treasury select committee report added that for many businesses it remains unclear how the government expects them to pay back loans in the future.

The committee said it is concerned that there may be a significant lack of capacity and willingness for the private sector to step in to provide solutions for corporate indebtedness, especially amongst small and medium-sized businesses.

It added the government must outline a plan for this within the next three months and should think creatively about potential interventions.

‘The committee’s disappointment that the government did not implement our recommendations to help those who have fallen through the gaps in support persists,’ said committee chair, Mel Stride.

‘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.

‘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.

‘This requires a very difficult set of judgements; it is where careful analysis and creative thinking will be critical.

‘As the committee has said throughout the crisis, the chancellor must continue to show flexibility in his approach. We hope that the Treasury’s unwillingness to implement the recommendations from our first report is not a sign of how it will respond to this one.’

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