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Rishi Sunak says some firms who were not planning to lay off staff will still bank £1,000 job retention bonus

The Chancellor unveiled his latest economic plan on Wednesday. (PA)

5 min read

Some companies who were not planning to make staff redundant will still bank the Government’s £1,000-a-head job retention bonus, Rishi Sunak has acknowledged.

The Chancellor said the centrepiece economic measure, announced in an emergency update on Wednesday, came with the risk of “dead weight” as firms who do not need the help make use of it.

But he argued that the Government did not have the “luxury” of more targeted interventions given the scale of the economic crisis sparked by the coronavirus pandemic.

Under plans unveiled by Mr Sunak on Wednesday, employers who have furloughed staff under the Coronavirus Job Retention Scheme will get a £1,000 bonus for every employee they keep in employment until the end of January 2021. Companies will get the extra cash in February 2021.

With 9.4 million workers currently on furlough, the policy has been costed at £9.4 billion.

But the Resolution Foundation think tank has said that employer surveys suggest firms are currently planning to make one million of those workers redundant as the furlough scheme ends — meaningmany  companies that do not currently plan to sack staff may still claim the money.

“The Job Retention Bonus of £1,000 for firms that bring back furloughed workers and still employ them in January will not make a major difference to employment levels,” the think tank said.

It added: “The significant deadweight cost, with payments mainly going to firms who would have brought back those workers anyway, is best thought of as cash grants to firms in the sectors that were hardest-hit by this crisis.”

But, defending the plan on Thursday morning, Mr Sunak said: “There are a million different businesses that are accessing the furlough scheme so they're all going to be in a slightly different set of circumstances.

“But we've looked through the earnings distribution of the furlough population. 

“And, given that, I believe that the thousand pounds will serve as a significant reward and incentive to many, many companies up and down the country and make a difference to those jobs being saved and help businesses ease through what is without question a difficult time.“

Pressed on fears employers could claim the money despite planning to keep staff on after bringing them back from furlough, the Chancellor said: “I think that's absolutely a fair point.

"And throughout this crisis I've had decisions to make: whether to act in a broad way, at scale, and at speed, or to act in a more targeted and nuanced way.

“And in an ideal world, you're absolutely right, you would minimise that deadweight and do everything in incredibly targeted fashion.”

But he added: “The problem is the severity of what was happening to our economy, the scale of what was happening, and indeed the speed that it was happening, demanded a different response.”

The Chancellor said: “Without question there will be dead weight, and there has been dead weight in all of the interventions we have put in place, and there will be some degree of moral hazard.

“But an ideal world, we wouldn't be doing those things.

"But, in order to get something like the furlought scheme up and running in the few weeks that we did it, we did not have the luxury of being able to design something that would target exactly everyone who specifically needed this help.”

Seizing on the comments, Shadow Chief Secretary to the Treasury Bridget Phillipson said: "The Government have had months to prepare for the end of lockdown and design targeted support to protect jobs - but instead we have an on-the-hoof fix that the Chancellor himself admits risks wasting billions of pounds of taxpayer money.  

"Hard-pressed sectors where thousands of jobs are at risk, like aviation, oil and gas, and tourism, will be missing out on the help they need while companies who are returning to normal get public money they don’t."

She added: "The Chancellor should be targeting support on those who need it, not handing it out aimlessly to those who don’t. It’s not brave to admit the Government plans to waste billions at a time when others are crying out for support.”


The latest Treasury figures show that the price-tag for Government interventions to fight the coronavirus pandemic is now approaching £190bn.

The £15bn cost of securing personal protective equipment for frontline staff alone has already topped the annual costs of running the Home Office, the data reveals.

Mr Sunak told the Today programme that the the Treasury would work to "return our public finances to a sustainable position over the long term"

But he said the UK was currently able to borrow money "at record low rates that enables us to carry a higher degree of debt".

And, pressed on whether ministers could be forced to jettison the Conservative manifesto pledge not to raise income tax, national insurance or VAT, Mr Sunak said: "I think it's too early to speculate."

He added: "Much as I know people would like to draw me into writing future budgets, I think the right thing to focus on right now is protecting as many jobs as possible if we can do that.

"That's the way that we limit long term damage on our economy and indeed minimise the damage."

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