A million UK workers now furloughed, as other companies collapse

The United Kingdom’s government will pay 80 percent of wages for workers placed on temporary leave.

bus stop Luton - reuters
The furlough plan is designed to help Britain's economy recover from the coronavirus lockdown once it is lifted [Paul Childs/Reuters]

More than a million United Kingdom workers have been placed on temporary leave due to the coronavirusChancellor of the Exchequer Rishi Sunak said on Monday, reporting a flood of applications since the government’s costliest programme to support the economy opened.

The scheme will pay 80 percent of employers’ wage bills until the end of June for staff suspended during the coronavirus lockdown – up to 2,500 pounds ($3,100) per worker per month. It received 140,000 applications from firms in the first eight hours it was open on Monday.

A further 449 people in the UK have died in hospital after contracting coronavirus, it was announced on Monday, bringing the country’s total number of deaths in hospital to 16,509. There were 19,316 tests carried out on Sunday, a long way from the government’s target of 100,000 tests undertaken daily by the end of April

Businesses that apply for the government’s furlough plan by Wednesday should receive a cash injection before the end of the month, when wages are often due, said officials.

“The grants … will help pay the wages of more than a million people – a million people who if they hadn’t been furloughed would have been at risk of losing their jobs,” Sunak said at the government’s daily news conference.

Civil servants have come out of retirement to help the country’s tax office set up the scheme, the chancellor added: “Times like this demand that the state turns to its most immediate purpose: the protection and support of its people.” 


Sunak again refused to estimate the total cost of the programme, but the government’s budget watchdog said last week it could reach 42 billion pounds ($52bn) within three months if it were to cover 30 percent of the UK‘s workforce.

The estimate was based on its projection that Britain’s economy would shrink by 35 percent during the three months to June due to lockdown restrictions.

Sunak said the scheme would help ensure the economy could return to normal more quickly when COVID-19 restrictions end.

Companies collapsing

Meanwhile, the number of British companies folding jumped in March in a potential early sign of the impact of the crisis, according to research published on Monday.

Analysis from the Enterprise Research Centre – led by staff at the University of Warwick and Aston University in central England – showed a 70 percent jump in company dissolutions to just over 21,000 in March 2020, compared with the same month a year before.

Compared with February, the increase was just over 19 percent.

Former Chancellor of the Exchequer Philip Hammond urged officials to help companies get ready for the time when the nation’s lockdown is lifted. 

“It is vital that business is ready for the green light when the government decides to signal it,” he told a Chatham House webcast.

Underwriting loans

A government programme to underwrite loans to businesses with a turnover of less than 45 million pounds ($56m) had already helped 12,000 businesses, Sunak said. This is up from 6,000 last week, when there was a backlog of more than 20,000 applications.

UK admits PPE shortage amid coronavirus criticism [2:31]

Bank of England (BoE) Governor Andrew Bailey said on Friday that banks needed to speed up lending under the programme and that it would help if the government underwrote 100 percent of lending to the smallest firms, removing the need for banks’ own credit checks.

BoE chief economist Andy Haldane said on Monday that this approach had worked in other countries such as Germany, though it was ultimately a political decision as it would increase taxpayers’ potential losses if the loans were not repaid.

But Sunak said on Tuesday that he was not persuaded, and that Britain’s overall support package for businesses – including the wage support programme – was more generous than the packages of most other countries.

“Where they have used loan guarantees that are different to ours they have done it partly because they are not doing some of the other things we are doing – for example the furlough scheme,” he said.

Source: News Agencies