Chancellor Rishi Sunak claps for the NHS (Getty)

    The furlough scheme will soon become a national addiction

    12 May 2020

    How much do you like your job? Well, here’s a test. You go can go to work and earn your current salary – or, if you prefer, you can stay at home and I’ll pay you four fifths of your salary, for ever after if you like. Difficult, isn’t it? True, there’s a bit of camaraderie around the water cooler at work, and there is – possibly — the satisfaction of feeling you have achieved something each evening when you clock off. But then again, do you really want to struggle in on buses, trains or traffic jams to earn that extra 25 percent? As for fulfilment, you could always get that from doing the garden, learning to speak Chinese or something on the internet. Or even playing golf, or tennis.

    Until a couple of months ago the above offer would have seemed wildly improbable. Not even Jeremy Corbyn would have dreamed it up. But now it is a reality, and known as the government’s Job Retention Scheme – or popularly called the furlough scheme. As a very temporary means of preserving jobs in an emergency it is possible to justify it. Yet this week, far from announcing a phasing out of the scheme after its scheduled end in June, Chancellor Rishi Sunak announced that it will instead be extended until October. It will continue to cover 80 percent of an employee’s salary, up to a maximum of £2500 per month.

    The announcement caught commentators unaware because it had been widely trailed that the scheme would be cut to cover only 60 percent of salaries and would be withdrawn entirely in September. Sunak had already called the scheme ‘unsustainable’. He had already been caught out by the sheer numbers of employees claiming on the scheme, which rose last week by a further 1.2 million to reach 7.5 million. But then he just rolled it over to October. Given that the Prime Minister announced on Sunday evening that he wants the economy largely open again in July, it is extraordinary.

    No wonder there are so many groups of workers who are resisting the return to work, citing concerns over their safety. Once they have been established in a life of leisure it is going to be extraordinarily difficult to wean many workers off the furlough scheme. Unions can be relied upon to keep on bleating about ‘safety’ until a vaccine is ready for deployment, maybe 18 months away, maybe never. Even then there will be other viruses, other excuses. The number of excess deaths in the winter of 2017/18, mainly from flu and other respiratory diseases, was 50,000 – higher than the past few months.

    Trouble is, there will be many people who are better off sitting at home on 80 percent of their salary than going out to work to earn 100 percent of it – once travel costs, childcare, tax and so on are taken into account. For millions, there is little incentive ever to return to work. Moreover, because the government has been so generous this time around it has created an expectation that it will always bail out businesses in trouble in this way. In future recessions we will have demands for furlough schemes. Individual industries, too, will start demanding to be able to furlough employees when the going is tough. We are heading towards an idea which even Jeremy Corbyn and John McDonnell rejected: a universal basic income.

    At £8 billion a month, the furlough scheme is already costing almost as much as the NHS. Worse, if it actually delays businesses returning to normal it could end up costing jobs. UK companies which have furloughed staff will have plenty of international competitors eyeing up their business. If, as seems increasingly likely, Britain ends up being the country slowest to emerge from lockdown, we may well rue allowing companies to put their staff out to grass on such generous terms.