The Coronavirus Job Retention Scheme

Think tank: Institute for Government

Author(s): Thomas Pope; Eleanor Shearer

September 10, 2021

This report from UK think tank the Institute for Government looks at how successful was the furlough scheme and what should happen next?

The furlough scheme risks providing poor value for money and should end as planned at the end of September – even if it is still supporting many jobs. This report, based on the final official data before the scheme is due to close, assesses the most radical economic policy the UK government enacted in response to coronavirus – and supports the government’s decision to bring it to a close later this month. It recommends that any government extension of the furlough support scheme be restricted for sectors still badly affected by restrictions, like aviation.

The scheme has cost £69 billion and counting, but has protected around 8 million people from unemployment. By keeping employees linked to their employers, it also helped the UK labour market recover more quickly in 2021 than other countries – like the US – which chose to introduce larger unemployment benefits rather than protect jobs. US employment is still 4% below pre-Covid levels and employers are reporting problems hiring. UK employment is only 1% down. There are around 1.5 million people still on furlough, but this is not a good reason to extend the scheme. Under half of jobs still on the scheme are in sectors that have been directly affected by coronavirus – like hospitality and aviation – and with restrictions now lifted the scheme is probably supporting many ‘unviable’ jobs that do not have a long-term future. With the labour market recovering and job opportunities increasing, it is better to end the scheme and allow workers to find jobs with better prospects.