MPs: Furlough “needs to be extended” to avoid massive unemployment.

MPs said the UK government should consider a targeted extension of the leave.

The coronavirus crisis could lead to massive long-term unemployment and viable firms could go bankrupt without support, a Treasury special committee warned.

However, retaining the circuit entirely would not be good value for money, he added.

The Treasury said it would “continue to innovate to support income and employment.”

The coronavirus job retention scheme is due to end on October 31. Under it, workers on leave received 80% of their salary, up to £ 2,500 a month.

At first, the state paid for all this. But firms had to start contributing to wages in September, the scheme began to be phased out.

Prime Minister Boris Johnson said earlier that extending the vacation in October would only keep people “in suspended animation.”

Chancellor Rishi Sunak also ruled out the renewal, instead stating that firms will be provided with £ 1000 for each laid off employee was still working at the end of January.

• Coronavirus: what happens when vacation ends?
• Extend vacation or risk a second wave of job cuts

But committee chairman Mel Stride said the chancellor “should carefully consider targeting expansion” of the scheme.

“The key point will be to help those enterprises that, with additional support, can survive the crisis as sustainable enterprises, rather than focus on those that, unfortunately, simply will not be viable in the changed post-crisis economy.”

Fee and skills

In a second report on its investigation into the economic impact of Covid-19, the committee also warned that the pandemic risks widening the gender pay gap due to the difference in hours of paid work in isolation – especially if the work schedule changes forever.

The MPs also said that people should be able to retrain and that small businesses should be able to fully participate in the government’s Quick Start program, which aims to create jobs for young people on a universal loan.

The trade organization of the Federation of Small Businesses (FSB) said that after the vacation scheme ends, “policymakers will need to carefully consider measures to contain mass unemployment, including the new scheme.”

FSB National Chairman Mike Cherry said: “The priority must be to protect viable small businesses – and all the jobs they provide – that have been disproportionately [hit] due to the coronavirus crisis, including those caught as a result of local isolation, given ongoing national restrictions, or personnel directly affected by Covid. “

The Resolution Foundation, which is campaigning to improve living standards, said that “expanding support for the hardest hit sectors of the economy will be essential to limit the rise in unemployment that Britain will face in the coming months.”

Thorsten Bell, chief executive officer of the think tank, said: “This authoritative report on the economic impact of the coronavirus should be a must-read for Treasury officials planning the fall budget, amid a highly uncertain backdrop of rising coronavirus cases.

“The Chancellor will need to rethink his plans to end support quickly, given the painful reality that the economic crisis will last.”

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Leading business groups warned this week that the UK risks a second wave of job cuts and a slower economic recovery if it does not extend the vacation scheme.

Germany, Belgium, Australia and France have decided to extend or launch new payroll support schemes next year.

A Treasury spokesman said it would help pay 9.6 million jobs by the time the UK scheme closes.

“We will continue to innovate to support income and employment,” said the spokesman.

“We help employees get back to work where they want to be with a £ 1,000 retention bonus.

“And we are creating new roles for young people through our Kickstart scheme, creating incentives for training and internships, and supporting and protecting tourism and hospitality jobs through our VAT cut and Eat Out to Help Out program last month.”

The unemployment rate in the UK is 3.9% since the quarantine was introduced.

But the Bank of England expects that rate to double to 7.5% by the end of the year, when government-funded support programs end.

Firms such as Rolls-Royce, Costa Coffee, Pret A Manger, Pizza Express, British Airways and BP have already announced thousands of job cuts.