Chancellor Rishi Sunak has insisted the furlough scheme will not be extended beyond October despite the severe impact of the Covid-19 pandemic on sectors including travel and entertainment.
Appearing on BBC Breakfast, Sunak was asked if he would rule out the notion of the scheme being extended, particularly for industries such as entertainment and travel that had been unable to return in practice.
He declined to address the outbound travel sector specifically, instead choosing to group travel with the hospitality industry which he said had been supported by the Eat Out to Help Out scheme and a reduction in VAT.
But he insisted that “most reasonable people” would say that the furlough scheme could not “carry on forever” and said the government’s focus would instead turn to previously announced job stimulus packages.
He said: “This has been one of the most difficult decisions I have had to make but if you look at it from start to finish, the government will have been stepping in to pay people’s wages for eight months. I think most people looking at that would say ‘gosh, that’s not something that can carry on forever, that’s quite a long period of time’.
“In common with almost all countries around the world, in one form or another their versions of this are slowly being wound down towards the end of the year.”
Sunak added that the Job Retention Bonus would help small and medium size businesses with payments for each staff member returning to work after furlough.
Kuoni chief execuitve Derek Jones described the chancellor’s stance as “disppointing but not unexpected”.
He tweeted: “By not providing additional support Rishi Sunak is writing off the jobs of tens of thousands of travel industry sector workers. These are people I know. They are passionate, hard-working professionals who deserve much better than this.”
Advantage Travel Partnership chief executive Julia Lo Bue-Said tweeted: “The travel sector is being completely overlooked. An industry which contributes £37.1bn to the UK economy is at breaking point.”
The Financial Times reported that the chancellor was due to come under increased pressure from the Scottish National Party to extend the furlough scheme during a visit to Scotland on Friday.
However, he received backing for his stance from the governor of the Bank of England, Andrew Bailey, who said it was right to end the scheme in October despite the threat of rising unemployment.
Bailey told the BBC: “It’s been a very successful scheme, but he’s right to say we have to look forward now. I don’t think we should be locking the economy down in a state that it pre-existed in.”
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