Calls for tax breaks on hiring as 1.9 million people out of work for six months


Tom Belger·Finance and policy reporterThu, 18 February 2021, 10:52 am

1.9 million people have not worked in the past six months, figures suggest. Photo: John Sibley/Reuters
1.9 million people have not worked in the past six months, figures suggest. Photo: John Sibley/Reuters

The UK government faces calls to cut employer taxes at next month’s budget, as figures suggest 1.9 million people have been out of work for at least six months amid the pandemic.

The number of workers on furlough has reached 4.5 million during the current nationwide lockdown, though it remains less than half the number during the first UK lockdown early last year.

While many furloughed workers have returned to work part-time or for temporary spells, a new study suggests 500,000 have not worked at all during the past six months. Others have lost their jobs, and unions warn the looming expiry of the scheme from April means more redundancies.

Analysis by the Resolution Foundation suggests another 700,000 people unemployed in January had been looking for work without success for at least six months.

“While those on long-term furlough have had far greater financial support, and have an easier route back into work (through their current employer), than those who have lost their jobs, they face many of the same challenges in terms of a loss of skills and missing out on earnings growth,” said the think tank, which focuses on living standards.

READ MORE: UK ‘needs £60bn tax hikes’ to plug black hole left by COVID-19

A survey for the think tank also found 21% of those furloughed for at least six months expect to lose their jobs in the next three months, with some told they face redundancy. 8% of the wider employed workforce also expect to lose their jobs.

The think tank is calling for the furlough scheme to be extended beyond the lifting of restrictions to give companies time to bring staff back and support the hardest-hit sectors as demand recovers. The Kickstart scheme for the long-term unemployed should also be extended, and self-employed workers excluded from help so far offered grants.

The number of workers on furlough, according to HMRC, the Office for National Statistics (ONS) surveys and Resolution Foundation and YouGov surveys. Chart: Resolution Foundation
The number of workers on furlough, according to HMRC, the Office for National Statistics (ONS) surveys and Resolution Foundation and YouGov surveys. Chart: Resolution Foundation

“Tax breaks on hiring could help more people to move jobs too,” said Nye Cominetti, a senior economist at the Resolution Foundation.

It proposes temporarily increasing the earnings threshold above which employers pay national insurance contributions for new employees from £8,800 to £28,600.

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The Federation of Small Businesses (FSB) made similar calls ahead of chancellor Rishi Sunak’s budget on 3 March.

It proposed slashing employer NI contributions before the furlough scheme ends, and a fresh “retention bonus” for employers bringing staff back on from furlough.

READ MORE: Vacancies jump as vaccines give UK a ‘major jobs boost’

Further measures it backs include new help for the unemployed who want to start a business and others who have missed out on crisis support schemes so far, from company directors to supply chains.

The FSB said on Thursday its research indicated a million small firms had been left out of support, much of which has focused on retail, leisure and hospitality. The business lobby group said 56% of furloughed staff worked outside these sectors, often in supply chains for the hardest-hit sectors.

A poll of more than 1,000 small business owners found one in five reporting they had received no financial help from the government during the pandemic, while another poll previously found only half had received cash grants.