The chancellor’s new jobs support scheme risks a major living standard squeeze for six million households, the Resolution Foundation has warned.
Rishi Sunak said he hoped the new plan, announced on Thursday, would “benefit large numbers”.
But the think tank said it would not live up to its promise and would only slow, not stop, further job losses.
“The coming rise in unemployment will mean a major living standards squeeze for families this winter,” it said.
Resolution Foundation chief executive Torsten Bell predicted that more than six million households could face an income loss of £1,000 from next April – at a time when unemployment could still be at its highest level in a generation.
The Foundation said that a single adult homeowner earning £20,000-a-year would face an income reduction of around 19% if they worked a third of their previous hours on the jobs support scheme, compared with a 70% drop were they to lose their job completely and move onto Universal Credit.
However, employees only benefit from the Job Support Scheme (JSS) where employers choose to use it, and the scheme is far less generous for firms which gives them little or no incentive to use it, the Foundation said.
Meanwhile, industries hit hard by the coronavirus pandemic are facing further uncertainty after missing out on help in the chancellor’s new emergency jobs scheme.
How will the Job Support Scheme work?
- The government will subsidise the pay of employees who are working fewer than normal hours due to lower demand
- It will apply to staff who can work at least a third of their usual hours
- Employers will pay staff for the hours they work
- For the hours employees can’t work, the government and the employer will each cover one third of the lost pay
- The grant will be capped at £697.92 per month
- All small and medium-sized businesses will be eligible
- Larger business will be eligible if their turnover has fallen during the crisis
- It will be open to employers across the UK even if they have not used the furlough scheme
- It will run for six months starting in November
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