Rishi Sunak's 'flawed' job support scheme puts three million jobs at risk, Labour warns

Employers who cannot afford to keep furloughed staff on face deadline to start redundancy consultations

Rishi Sunak's Job Support Scheme will replace the Job Retention Scheme this October (Getty Images)

The jobs of almost three million people working for small businesses are at risk because of Rishi Sunak's "flawed" job support scheme, Labour has warned.

Shadow chancellor Annelise Dodds accused the chancellor of "pulling up the drawbridge" on workers who had put their faith in him and forcing employers to choose which staff to keep and which to fire.

Thursday marks a critical deadline for jobs as it is one month until the furlough scheme ends and firms that wish to make 20 to 100 staff redundant must start 30-day consultations or face paying more in wages.

The new scheme that replaces furlough incentivises employers in financial trouble to sack staff by making it more expensive to keep two people on reduced hours than to sack one and keep the other.

Viable businesses that need support to cope with restrictions imposed on them by the government now face tough decisions.

“They pinned their hopes on the Chancellor to deliver, but he’s pulling up the drawbridge at the worst possible time," Ms Dodds said.

“This wasn’t by accident – it was by design. This sink or swim mentality is a throwback to the worst days of Thatcher, and just like in the 1980s people on the lowest incomes will pay the highest price.”

Some 2.8 million people working for small and medium-sized firms were furloughed under the Job Retention Scheme, Labour estimates.

While many of those will have since been brought back to work, new national restrictions imposed last week, as well as local lockdowns across much of the North of England mean that around 133,000 SMEs cannot operate at all or are trading at reduced capacity, according to the party's figures.

Restaurants, licensed clubs and event operators are among those worst affected.

Over a million SMEs are also still experiencing a fall in turnover, with approximately 310,000 turning over less than half what they did over the same period last year.  

Labour calculates that bringing back one bar manager full-time will cost £455.30 per week, but it would cost £610.89 for the same bar to bring back two workers for half their working week, a difference of £155.60  

Ms Dodds called for an urgent meeting with her opposite number to discuss the scheme and better support for workers.

Citizens Advice warned of a “bleak winter” after a sharp rise in the number of callers worried about losing their job when the furlough scheme ends.

Andy Gillett, a telephone advice manager at Citizens Advice Blackpool, says: "Work worries are really ramping up. With the end of the furlough scheme in just a few short weeks, a lot of people feel like they're in the waiting room for a redundancy.

"There's a sense of underlying anxiety, but at the same time people are trying to be practical, for example asking how they'd go about claiming benefits or what they can do about their bills if they suddenly lose their income.

"The hardest thing is people saying that if they lose their job there won’t easily be another to go into - for many, that’s the reality of the labour market."

Dame Gillian Guy, Chief Executive of Citizens Advice, said:  “The furlough scheme has been an extraordinary intervention, but as it draws to a close we could face a bleak winter of redundancies.

“The Chancellor has acknowledged that the new Job Support Scheme won’t protect every job. While people look for work it’s critical our benefits system provides a strong enough safety net.

“Making the £20 uplift to Universal Credit permanent would provide some much-needed security as we weather this storm.”