For immediate release
Amid calls for the furlough scheme not to be tapered off, analysis of HMRC data released today has found continuing the full scheme would cost taxpayers an extra £9 billion, or up to £18 billion if the scheme was extended to the end of the year. This is on top of the existing £65.9 billion total cost of furlough.
The scheme, which under current plans begins to taper off from today and ends on 30 September, has supported millions of jobs through coronavirus. But with the country emerging from the pandemic, the TaxPayers’ Alliance warns the scheme is still paying the wages of over 2.36 million people - almost six-and-a-half times the size of the entire Tesco workforce.
Extending the full scheme would place a significant extra burden on taxpayers, with the cost almost equivalent to a 3 percentage point rise in employer national insurance, at £19.5 billion in 2022-23. This would come at a time when state support should be rolling back as the economy reopens.
With the removal of all restrictions still on course for 19 July in England, the TaxPayers’ Alliance is calling on the government to continue with the tapering as planned or even wind down the scheme more quickly as appropriate.
- The coronavirus job retention scheme (CJRS) has been available since 1 March 2020 and is due to finish at the end of September 2021.
Some have called for the full scheme to be extended. If the scheme was extended without tapering until 31 December 2021, this could mean £18 billion in CJRS grants being paid to employers from 1 July 2021.
As of 31 May 2021, 2,364,100 employments are supported by the CJRS. This is equivalent to 6.4 times the size of Tesco’s workforce in 2020-21 (of 367,321). Tesco is one of the largest private sector employers in the UK.
If the CJRS was continued until the end of 2021 without tapering, a potential equivalent tax rise would be employers’ national insurance. A rise in employers’ class one national insurance by 3 percentage points would be equal to £19.5 billion in 2022-23.
- The tapering of the CJRS from 1 July 2021 should continue as planned, or be wound down more quickly as appropriate. With a full reopening of the four nations’ economies expected between July and August, a scheme introduced to preserve employments from March 2020 now has limited justification.
John O’Connell, chief executive of the TaxPayers' Alliance, said:
"Furlough has been a lifeline to the businesses and individuals whose livelihoods were interrupted by the pandemic.
“But with full unlocking in sight, any unnecessary extension of the scheme could leave the taxpayer on the hook for billions more.
“The chancellor must drive ahead with winding down furlough and focus on letting the economy stand on its own two feet.”
TPA spokesmen are available for live and pre-recorded broadcast interviews via 07795 084 113 (no texts)
Media Campaign Manager, TaxPayers' Alliance
24-hour media hotline: 07795 084 113 (no texts)
Notes to editors:
Founded in 2004 by Matthew Elliott and Andrew Allum, the TaxPayers' Alliance (TPA) campaigns to reform taxes and public services, cut waste and speak up for British taxpayers. Find out more at www.taxpayersalliance.com.
TaxPayers' Alliance's advisory council.
The TaxPayers’ Alliance supported emergency measures taken during the coronavirus crisis. Read our full statement here.
- The coronavirus job retention scheme does not include grants paid to the self-employed. £25.2 billion has been paid (up to 6 June 2021) from the self-employment income support scheme.