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Job Losses Expected as Furlough Scheme Ends



There is expected to be a rise in joblessness in the coming weeks with the government’s furlough scheme having closed at the end of September.

Estimates suggest that the scheme subsidised the wages of around 11 million people since it was initially established shortly after the onset of the coronavirus crisis in spring 2020.

Roughly a million people are believed to still be relying on the scheme for at least part of their income as it closes, with widespread redundancies a very likely consequence.

Government ministers have highlighted the high number of job vacancies currently available around the country and suggested there should be plenty of fresh employment opportunities on offer for people being taken off furlough.

The government has also argued that there was never likely to be a perfect time to end the financial support schemes set up in response to the virus crisis.

However, some critics of the government have argued that the furlough scheme specifically should be kept in place for a while longer to support businesses and their employees into the new year.

For employers struggling financially, the end of the furlough scheme is one potential headache while another is the end of a ban on winding up petitions.

The ban on creditor actions against debtors has kept a significant number of companies in business in recent quarters and there are expectations that rates of corporate insolvency, administration and liquidation could be set to rise sharply in the final few months of the year and into 2022.

According to the latest figures from the insolvency experts at Begbies Traynor, there were roughly 650,000 companies in a position of “significant financial distress” after the second quarter of this year.

Julie Palmer, a partner with Begbies Traynor, has said that the number of so-called zombie businesses across the UK is considerable, with many companies having taken on government-backed debts during the pandemic that they cannot afford to pay back.

“Whilst ‘Freedom Day’ on 19th July has given many businesses a sense or normality, history suggests that unmanageable levels of debts and subsequent overtrading will eventually take their toll on these businesses,” Ms Palmer said in a recent statement.

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