UK furlough figure plunges to 2.4 million in May

·Business Reporter, Yahoo Finance UK
·4 min read
Commuters cross London Bridge in London, England. The Chancellor of the Exchequer, Rishi Sunak, announced the government's Support For Jobs plan in the House of Commons today. Beginning in November when the current furlough scheme ends, the government will subsidise the pay of employees who are working fewer hours due to lower demand. Support For Jobs will run for six months. (Photo by Hollie Adams/Getty Images)
The data also showed that 30% of businesses had staff on furlough, down from 35% a month earlier. Photo: Hollie Adams/Getty Images

The number of people on furlough in the UK fell to 2.4 million in May as the economy reopened under prime minister Boris Johnson’s roadmap out of lockdown.

The latest figures show that more than a million workers came off chancellor Rishi Sunak’s scheme, meaning that the programme is now supporting the smallest number of people since the start of the pandemic.

Estimates from the Office for National Statistics' (ONS) weekly survey suggest that numbers continued to fall in June, and that there are now between 1.3 million and 1.9 million people on the scheme.

However, the ONS had previously estimated 1.7 million people were furloughed in late May.

“Higher numbers on furlough than expected does mean a bumpier ride in aggregate, and more individuals at risk of unemployment in the months ahead," said Torsten Bell, the chief executive of the Resolution Foundation think tank.

The data also showed that 30% of businesses had staff on furlough, down from 35% a month earlier.

The age groups with the largest numbers on furlough are still 25 to 34 and 35 to 44. However, the highest take up rate among men is among those aged 65 and over. The highest for women is the under-18s, followed by those aged 65 and over.

HMRC said that younger people have returned to work faster. Between the end of April and the end of May, the number of under-18s on furlough fell 68%, those aged 18-24 fell 45% and those aged 25-34 were down 33%. By contrast those aged 55-64 dropped 25% and those aged 65 or over fell 16%.

Watch: How the UK government furlough scheme is changing

From 1 July, employers must pay 10% of their furloughed workers' usual wage, while the government will continue to pay the other 70%. From 1 August, the employers' contribution rises to 20%, with the government's contribution reducing further.

“It bodes well for the tapering of furlough today, which means furloughed staff will start costing employers significantly more to keep on the books. However, 2.4 million people remain vulnerable, and older people, travel workers and men look increasingly at risk,” said Sarah Coles, personal finance analyst at Hargreaves Lansdown.

She added: “In some industries, furlough is still widespread, most notably airlines at 57%, hotels at 57% and tour operators and travel agents at 51%, and in these industries the numbers on furlough dropped far more slowly than elsewhere.

"For those still stuck on furlough, there’s the risk their employers will be seriously reconsidering whether they can afford to keep them on now they are shouldering 10% of their wages – alongside pension and NI contributions. These questions will become even more pressing when the scheme tapers again in August.”

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The scheme is set to end in September, when the new Kickstart scheme will launch, but there have been calls for an extension.

Business leaders have continuously sounded the alarm over a renewed threat to jobs, particularly as the UK government delayed its roadmap out of lockdown by four weeks until 19 July.

Frances O’Grady, the general secretary of the Trades Union Congress (TUC), said: “Ministers must not pull the plug on our recovery by cutting off support too soon.

“We need a cast-iron commitment from the chancellor that he will extend furlough for as long as is needed, rather than ending it abruptly in three months’ time. Working families need this certainty now – not a rollercoaster approach to protecting livelihoods.”

The government has so far spent £66bn on the Coronavirus Job Retention Scheme, furlough’s official name, and it has supported 11.6 million jobs since March 2020.

"The furlough isn't simply being switched off," business secretary Kwasi Kwarteng told the BBC's Today programme on Thursday. "All we're saying is that the employer should contribute something to the payroll, and then over time, over the next three months, the furlough will be taken away.

"It's a difficult balanced decision to make, the furlough wasn't going to last forever," he added. "I think, as we open up in two weeks' time, this is the right time to think about the balance of payroll, which the government pays and which employers pay."

Watch: COVID-19: Chancellor hails sharp fall in furlough numbers as scheme starts to wind down