Chancellor Rishi Sunak has announced a £1,000 “job retention bonus” for employers that bring workers back from furlough.
If an employer brings someone back who was furloughed and continues to employ them between November and January, the government will award a £1,000 bonus for each worker.
Employees must earn at least the lower earning limit for national insurance (£520 per month) between November and January in order for employers to be eligible for the pay-out.
Sunak said that if the government paid the bonus for every one of the 9 million workers who have accessed the job support scheme since its inception, “this would be a £9bn policy to retain people in work”.
“If you stand by your workers, we will stand by you,” he said.
Announcing its Plan for Jobs package of measures, the government said the UK was entering its second phase in post-pandemic recovery, and would now turn its attention to supporting jobs through skills development, creating jobs through infrastructure investment and protecting jobs through incentives for consumers to support tourism and hospitality businesses.
Sunak added that it would be “irresponsible” to keep the furlough scheme going past the end of October, when it is due to end, pledging to wind it down “flexibly and gradually”.
Sunak’s ‘summer statement’ today also confirmed the Treasury’s plan to invest £2bn in a“kickstart scheme”of work placement support for young people aged between 16 and 24.
Under this scheme, employers will be able to subsidise the wages of people aged 16-24 that are claiming Universal Credit and at risk of long-term unemployment.
Funding available for each six-month job placement will cover 100% of the national minimum wage for 25 hours a week – and employers will be able to top this wage up.
In addition, the chancellor announced that the government would give companies £2,000 each to encourage them to hire apprentices, and £1,500 if they hire apprentices over 25.
This comes on top of recent announcements to triple the scale of traineeships, to invest £17m in sector-based work academy placements and a £900m pledge to double the number of work coaches available, and invest more in the National Careers Service.
It has also pledged £1bn in additional investment in the Department for Work and Pensions to help jobseekers, including doubling the number of people who work in job centres.
In tourism and hospitality – where numbers on furlough have been the highest – the government said it would protect jobs through a six-month cut to VAT from 20% to 5%, encouraging customers to book holidays or eat out and stimulate employment.
An “eat out to help out” scheme – where consumers will receive vouchers to eat out at restaurants – will also support 2.4 million staff in more than 150,000 businesses, Sunak added.
A £3bn green investment package will help stimulate employment in upgrading buildings and reducing emissions, creating around 140,000 jobs.
Sunak said he had never been “the prisoner of ideology”; that the plan was “never just a question of economics, but of values”.
He said: “We believe in the nobility of work. We believe in the inspiring power of opportunity. We believe in the British people’s fortitude and endurance.
“Our plan has a clear goal: to protect, support and create jobs. It will give businesses the confidence to retain and hire. To create jobs in every part of our country. To give young people a better start. To give people everywhere the opportunity of a fresh start.”
Shadow chancellor Anneliese Dodds, in response to the announcements, pointed out that the benefits claimant count topped 3 million in June. She accused the chancellor of “putting off big decisions” and said that he should have announced a “back to work budget”.
She added that the Kickstart Scheme is very similar to the Jobs Future Fund – a scheme implemented by a Labour government and cancelled by the Conservatives.
Stephen Ratcliffe, employment partner at Baker McKenzie, said that the job retention bonus was a “welcome and surprising development”, but said urgent guidance was needed on how it would work. He said: “Those facing cash flow issues will also need comfort that the bonus will be paid promptly, without unnecessary administration.
“Both those making use of this scheme, and those who have used and continue to use the furlough scheme, also need reassurance that that the government will not later seek to recoup those funds due to minor or inadvertent errors in applying the rules, particularly given the contradictory and uncertain guidance we have seen in respect of the furlough scheme.”
The Institute for Employment Studies said there would be four key challenges in ensuring the proposed measures are effective.
- Private recruiters (many of whom are being paid not to work through the furlough scheme) are needed to help mobilise the employment response;
- No clarity on how local authorities would help to co-ordinate and lead responses locally;
- No clarity on how those with health conditions and disabled people would be supported to return to work; and
- Whether the funding would be enough, “even with the scale of the response today”.
“To take one example, the maximum value of the “kick-start” subsidy for young people will be a third lower than that offered through the Future Jobs Fund, but is intended to create four times as many jobs,” said the IES.
“While £100 million investment in support for 18 to 19-year-olds will repair just a fraction of the cuts in further education funding in recent years.”