New analysis by the Labour Party has found that almost three million jobs are at risk as the deadline approaches for small-and-medium-sized businesses to issue redundancy notices before the job retention scheme ends.
Commenting ahead of the deadline on Thursday, Labour’s Anneliese Dodds has accused Rishi Sunak of letting down businesses with his ‘winter economy plan’ and accused the Chancellor of adopting a “sink or swim mentality”.
Her remarks come as research by Labour shows that 2.8 million SME employees were furloughed at the start of September, with the party highlighting that since then new restrictions have been introduced affecting 133,055 of these businesses.
Criticising the new ‘job support scheme’, the Shadow Chancellor said: “Last week the Chancellor should have listened to Labour and introduced a jobs recovery scheme that incentivised employers to keep more staff on.
“Instead, millions of jobs are at risk because he’s forcing small businesses to choose which staff to keep and which to fire. These are viable businesses that just need support to cope with the restrictions the government has imposed on them.”
October 1st is the last day on which employers can issue notices if they are planning to lay off between 20 and 99 people before support under the coronavirus job retention scheme is fully withdrawn by the government on October 31st.
Labour has stressed that over a million SMEs are also still experiencing a decrease in turnover due to coronavirus, with approximately 310,000 turning over less than half what they did over the same period last year.
Dodds added: “They pinned their hopes on the Chancellor to deliver, but he’s pulling up the drawbridge at the worst possible time. 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.”
The Shadow Chancellor wrote to Sunak on Tuesday and highlighted seven ways that the winter economic plan put forward by the Chancellor last week, in which he unveiled his new ‘job support scheme’, “fails Britain’s workers”.
The new scheme will see eligible employees – working at least one third of their normal hours – have their worked hours paid by employers and a portion of their unworked hours paid jointly by the government and their employer.
Dodds welcomed the “U-turn” but highlighted problems in the new scheme, which is set to begin in November and run for the following six months. Designed to protect “viable jobs” only, it does not offer specific help to sectors such as hospitality.
The Resolution Foundation also pointed out that under the new scheme, it would cost an employer 33% more to employ two people for half their hours than one person full time, assuming an annual wage of £17,000.
Using median salary calculations for hospitality workers, Labour showed 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.
HMRC recorded the number of employees furloughed at the end of July in SMEs at 3.1 million. But the public body estimated that the number furloughed at the end of July is likely to be 10% higher once all returns are received and revisions made.
The intervention from Dodds follows Keir Starmer’s comments to the Prime Minister on Wednesday, in which he accused Rishi Sunak of having made a “political choice to reduce economic support just when the new health restrictions are coming in”.