The Government should reject calls for a rapid ending of its Coronavirus Job Retention Scheme (CJRS), according to new research published by Resolution Foundation.

The think tank suggested the Government should instead set out plans for a gradual phasing out of the scheme, with the timing dependent on the lifting of lockdown restrictions.

The report, titled Getting Britain working (safely) again, noted that the CJRS is playing an essential role for firms and households during the Covid-19 pandemic, with at least 6.3 million jobs currently being furloughed – at an estimated cost of around £8bn a month – helping the UK to avoid “depression-era” levels of unemployment.

However, Resolution Foundation’s report has warned that decisions about the future of the CJRS and moving too quickly could cause a second surge in unemployment – while moving too slowly could fail to support the recovery.

Resolution Foundation chief executive, Torsten Bell, commented: “The CJRS has been an essential lifeline for millions of families and hundreds of thousands of firms. However, the Chancellor now faces decisions about the future of the scheme that are much more complex than it’s unprecedented, but ultimately relatively straightforward, introduction.

“The Government should reject calls to swiftly end the CJRS. Moving too quickly could spark a huge second surge in job losses at a time when unemployment already looks set to be at the highest level for a quarter of a century.”

In order to reassure firms and workers fearful of a premature withdrawal of support, the report suggested the Government should announce that the scheme will exist in its current form for workers already furloughed until early August, and in some form for all firms until at least the end of September.

The think tank has also suggested that allowing ‘partial furloughing’ from June onwards would support the reopening of the economy, with the report indicating this would enable employees to return to work for some hours, while still receiving 80% of their wages for the hours that they remained furloughed.

“The scheme cannot last forever, however,” Bell added. “It should be phased out gradually, with a longer timeframe for the hardest-hit sectors. The Chancellor should also use the scheme to support the recovery by asking employers to contribute towards the wage costs of furloughs and allowing ‘partial furloughing’, with workers returning to work for some of the week, even if not all.

“The retention scheme could end up costing almost £50bn. That’s a huge sum – but money well spent given the huge threat posed to our health, economy and living standards by this pandemic.

“This policy has made a huge difference in this crisis. It now needs careful and gradual change to ensure the benefits it has provided are secured rather than squandered.”

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