MPs urge Chancellor to ‘carefully consider’ targeted extensions to Coronavirus Job Retention Scheme

New Treasury Committee report also recommends extension of universal credit increase, and review of statutory sick pay to ensure that workers can afford to self-isolate when needed

The Treasury Committee has urged the Chancellor Rishi Sunak to 'carefully consider' targeted extensions to the Coronavirus Job Retention Scheme (CJRS).

In the second report of its inquiry into the economic impact of coronavirus - following a June 2020 report which focused on gaps in support in the CJRS and the Self-Employment Income Support Scheme - the Committee considers the medium-term challenges which have emerged as the economy comes out of lockdown, including minimising long term unemployment increases, supporting the recovery of consumer spending, and dealing with elevated levels of corporate debt.

In relation to avoiding long term unemployment, the Committee says that -

'The [CJRS], which subsidised the majority of furloughed employees’ wages, comes to an end in October. Some sectors suffering most from social distancing may no longer be viable, but many businesses in these sectors will have a viable long-term future, but only if they continue to be supported either by their owners or by taxpayers beyond the expiry of the CJRS. Whilst we recognise that the cost of the CJRS means that the Scheme cannot persist indefinitely, the Chancellor needs to carefully consider whether a targeted extension of the CJRS and/or other targeted support measures will be required, and to explain his conclusion.'

The Committee's recommendations on minimising unemployment also include that the government should -

• consider extending the measures increasing the generosity and accessibility of universal credit put in place in March 2020;
• conduct a study to examine the adequacy of and eligibility for sick pay, given that poor levels of statutory sick pay will make it harder for workers to isolate when needed; and
• publish an updated version of the distributional analysis in the July 2020 Plan for Jobs policy paper, alongside an equality impact analysis of how the recession is impacting different groups, and the extent to which government measures are mitigating falls in incomes for those hardest hit.

Commenting on the report, Committee Chair Mel Stride said -

'The Chancellor should carefully consider targeted extensions to the CJRS and explain his conclusions. The key will be assisting those businesses who, with additional support, can come through the crisis as sustainable enterprises, rather than focusing on those that will unfortunately just not be viable in the changed post-crisis economy. This requires a very difficult set of judgements; it is where careful analysis and creative thinking will be critical.

As the Committee has said throughout the crisis, the Chancellor must continue to show flexibility in his approach. We hope that the Treasury’s unwillingness to implement the recommendations from our first report is not a sign of how it will respond to this one.'

The Treasury Committee report Economic impact of coronavirus: the challenges of recovery is available from parliament.uk