Western Isles needs an extension to Job Retention Scheme to avoid spike in unemployment

The Institute for Public Policy Research and Resolution Foundation think tanks are calling for the Government to extend or modify the Job Retention Scheme beyond October to avoid triggering a spike in unemployment.

Figures from HM Revenue and Customs show around 3,000 claims to furlough jobs were made in Na h-Eileanan Siar by the end of July – 100 more than at the end of June.

That’s 24 per cent of all eligible jobs in Na h-Eileanan Siar – although it is actually one of the areas least reliant on the scheme in the UK.

During this time, the Government paid 80 per cent of employees’ wages through Chancellor Rishi Sunak’s scheme, up to a maximum of £2,500 per month per employee.

Jobs at firms which are unable to operate or have no work for their employees because of coronavirus are eligible for furlough.

Across Scotland, the scheme has a take-up rate of 32 per cent, which is the same as across the whole of the UK.

From September, the Government’s contribution will drop to 70 per cent of wages, with employers having to make up the extra 10 per cent, before the scheme is expected to end in October.

But the Institute for Public Policy Research said that would be a “historic mistake”, and an extension is urgently needed.

Carsten Jung, IPPR senior economist, said: “The jobs recovery is real, but it looks slow and fragile. Even though the lockdown has been partially lifted, the economy is still only carefully picking up speed.

“Reforming and extending the scheme now could prevent jobs losses and boost the economy in this time of need.”

The Resolution Foundation said the scheme has played a critical role in protecting firms and workers from the worst of the economic crisis.

Nye Cominetti, senior economist at the think tank, said going forward the Chancellor’s “immediate priority” should be on the hardest-hit sectors, or he risks an unemployment spike this autumn.

The industry most reliant on the scheme in Scotland is hospitality, with 77 per cent of eligible workers furloughed by the end of July.

Also set to end in October is the Self-Employment Income Support Scheme, which allowed the self-employed to claim a grant worth 80 per cent of their average monthly profits between March and May, up to £7,500.

Separate figures from HMRC show around 1,000 people in Na h-Eileanan Siar had applied to the scheme by the end of July – 74 per cent of eligible workers.

They can now apply for a second and final grant, worth 70 per cent of profits and capped at £6,570, before the scheme closes on October 19.

But the Association of Independent Professionals and the Self-Employed said over a million freelancers across the UK are still not able to get support.

Derek Cribb, IPSE’s chief executive, said: “With the threat of a second wave and further lockdowns looming, Government must urgently consider ways to support these desperate forgotten freelancers.”

A Treasury spokeswoman said “We’ve been clear that that we can’t sustain this situation indefinitely but the end of the furlough scheme is not the end of our support for jobs.

“For businesses that can successfully bring furloughed employees back to work, this includes a £1,000 job retention bonus.”