Today Chancellor Rishi Sunak has outlined details of the extension to the Coronavirus Job Retention Scheme: IFS response

Today Chancellor Rishi Sunak has outlined details of the extension to the Coronavirus Job Retention Scheme.

In response to this announcement, Paul Johnson (IFS Director) said:

“The Chancellor has announced a generous extension of the CJRS. Employers are initially being asked to cover a smaller share of the scheme cost than had been expected - only 20% of wages (plus pension and NI costs) by October. This will mean that fewer jobs are likely to be lost in the short run and will therefore provide a lifeline to many workers. Hopefully, only those firms which are pretty sure jobs are gone for good will make people redundant as a result of having to pay just pension and NICs in August. But preserving jobs for longer comes with a hefty price tag and in some cases will simply delay the movement of employees into unemployment.

Extending the CJRS to part-time workers and allowing this to start a month earlier than previously announced makes sense. It won’t help those who are already working part-time – unless their employers furlough them before June 10^th and bring them back part time in July.

Keeping the payment to furloughed employees at 80% throughout risks undermining the emphasis on persuading people to return to work either full or part time.

The scheme for the self-employed has also been extended. This provides welcome clarification for the self-employed. This scheme has already meant that some self-employed people are financially better off than if the crisis had not occurred – the additional grant will provide further income to these groups.

The total cost of the CJRS and SEISS could easily breach £100bn – about 11% of total government spending in a normal year, and about the same as the amount spent on the NHS across the same period."

Our previous work discusses the extension of the CJRS to part-time workers (https://www.ifs.org.uk/uploads/BN291-Extending-the-Coronavirus-Job-Retention-Scheme.pdf) and discusses who gains from and who falls through the gaps of the two schemes (https://www.ifs.org.uk/publications/14786 )