London Daily

Focus on the big picture.
Friday, Jul 24, 2026

Jobs scheme 'won't stop major rise in unemployment'

Jobs scheme 'won't stop major rise in unemployment'

Rishi Sunak's new jobs support scheme will slow but not stop, "major" job losses, influential think tank the Resolution Foundation has warned.

The chancellor said he hoped the new plan, announced on Thursday, would "benefit large numbers".

But the Resolution Foundation said the fact firms had to pay employees for hours not worked meant many would have "little or no incentive" to use it.

The plan "will not significantly reduce the rise in unemployment," it said.

The Foundation also highlighted that around six million of the UK's poorest households could see their incomes cut by £20 a week from next April, when the government's temporary boost to basic benefits comes to an end.

The Job Support Scheme, which will replace the furlough scheme, will see workers get three quarters of their normal salaries for six months.

To be eligible, employees must work for at least one third of their normal hours.

For the hours not worked, the government and employer will each pay one-third of the remaining wages.

Torsten Bell, chief executive of the Resolution Foundation, said the higher contribution required from firms, compared to the furlough scheme, meant the new Job Support Scheme "will not live up to its promise to significantly reduce the rise in unemployment."



At the start of the pandemic the government sought to reduce the economic impact of lockdown measures by temporarily boosting the standard allowance you collect if you claim benefits by £20 to £94.25 a week.

That served to soften the income shock endured by workers moving from a job to benefits, which pay less than a fifth of the average wage.

The Resolution Foundation's analysis points out that the Chancellor Rishi Sunak has chosen not to extend that temporary boost beyond April next year.

That means that in April, at a time when unemployment is likely to be rising quickly, well over six million families already on benefits will see their incomes cut by £20 a week.

And because they'd be forced to spend less, it would also reduce the overall level of demand in the economy, making more job losses more likely.

The Foundation's report notes, for example, that it would cost a firm £1,500 to employ one full-time worker on £17,000, but more than £2,000 a month to employ two half-time workers on the same full-time equivalent salary.

One full-time worker on £10,000 would cost £800 a month, compared with £1,100 a month for two half-time workers.

The government has stressed the scheme has been gratefully received in many quarters.

The chief secretary to the Treasury, Steve Barclay, told BBC Breakfast that "many employers value the flexibility of being able to tailor how much time employees are working as we go through uncertainty of winter months".

Mr Barclay said the scheme has been "so warmly welcomed" by the likes of the CBI, FSB, business leaders and trade unions, as well as sectors such as aerospace and hospitality,

He said that businesses want to retain their skills and expertise of the labour market, and "wanted the ability to bring people back on a part time basis".

Missing out


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.

Hospitality, events and retail workers and businesses have expressed concern, as have those on zero-hours contracts.

Rishi Sunak said employees must be in "viable" jobs to benefit from the wage top-up scheme.

This means people working in industries currently closed - such as nightclubs - may lose out as there isn't any work.

Mr Sunak said he hoped the new plan, announced on Thursday, would "benefit large numbers", but warned the government "can't save every job".

Opposition politicians have called for more emphasis on training for workers losing their jobs.

Shadow chancellor Anneliese Dodds told the BBC a national training strategy was needed "so that when people become unemployed, they can hopefully be retrained with new skills".

The Lib Dems' Christine Jardine also criticised the lack of focus on training. She told the BBC that while the jobs plan was described as a "bridge for the economy", she wanted to know "where will it take us?"

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

Newsletter

Related Articles

0:00
0:00
Close
Badenoch Rejects Grant Shapps' Bid to Return as Conservative Candidate
BAE Chief Warns Britain Has Underestimated the Risk of War
Burnham Rules Out New Scottish Independence Referendum in First Talks With Swinney
UK Government Strengthens Northern Economic Agenda Through Manchester Headquarters and Regional Partnerships
United Kingdom Opens New Furness Peninsula Coastal Route Under King Charles the Third England Coast Path
England Reduces Business Costs for Hospitality Sector Through New Relief Package
United Kingdom Allocates Seven Point Three Million Pounds for Zero-Emission Aviation Research
United Kingdom Begins Restoration Works on Portishead Railway Line After Six Decades Without Passenger Services
United States Tariff Measures Create New Trade Challenges for United Kingdom and European Union Businesses
Prime Minister Andy Burnham Meets Scottish and Welsh Leaders to Promote Regional Growth Cooperation
United Kingdom Government Announces Twenty Percent Business Rates Cut for Pubs, Clubs, and Music Venues
Prime Minister Andy Burnham Opens Manchester Government Headquarters to Shift Decision-Making Away From Westminster
United Kingdom Defence Ministry Says Armed Forces Ready After Iran Accuses London Over US Military Strikes
United Kingdom Inflation Falls to Two Point Six Percent as Prime Minister Andy Burnham Gains Economic Breathing Room
OpenAI Sued After ChatGPT Allegedly Discouraged Emergency Care Before Near-Fatal Embolism
Viral Video Raises Questions Over Twelve-Dollar Croissants at Manhattan Bakery
UK Balances Security Commitments With Economic Growth Priorities
Retail and Hospitality Sectors Navigate Consumer Caution and Tax Changes
Key Trends to Watch
British Land Appoints Joanne McNamara as New Chief Executive Officer
UK Government Names New Life Peers Including Former Military and Civil Service Leaders
Institute of Directors Urges Government Action on Employment Costs and Skills Shortages
IMF Raises UK 2026 Growth Forecast to One Percent
UK Retail Sales Growth Slows Sharply as Households Cut Discretionary Spending
UK Ten-Year Bond Yields Remain Above Five Percent as Government Faces Higher Debt Costs
UK Government Plans Earlier End to Low-Value Import Duty Exemption for Online Retail Parcels
Reform UK Leads Tight Westminster Voting Poll as Conservatives and Labour Remain Close
Royal Navy Carrier Strike Group Completes First Arctic and North Atlantic Mission Phase
Andy Burnham Government Cuts Business Rates for Pubs and Music Venues by Twenty Percent
UK Inflation Falls to Two Point Six Percent in June as Food and Fuel Prices Ease
Andy Burnham Becomes UK Prime Minister Facing Growth Challenges and Fiscal Pressure
UK Government Reviews Long-Term Balance Between Cost Relief, Industry Support, and Public Investment Priorities
BBC Could Receive Permanent Royal Charter Under Government Proposal
Northern Ireland Proposes End to Severe Weather Exemptions for Electricity Compensation Rules
Andy Burnham Holds Talks With UK Devolved Leaders on Regional Cooperation and Devolution
House of Lords Launches Inquiry Into Risks Facing UK Democratic Institutions
ScottishPower Renewables Plans Major Rebuild of Whitelee Wind Farm With Fewer Larger Turbines
UK and Italy Leaders Discuss Global Combat Air Programme and Future European Cooperation
UK Government Announces Six Hundred Million Pound Aerospace Investment Package at Farnborough Airshow
European Union Approves UK Participation in Ninety Billion Euro Ukraine Support Loan Framework
Rolls-Royce Warns UK Government Over Jet Engine Funding Decision and Future Manufacturing Plans
UK Inflation Falls to Two Point Six Percent in June as Fuel and Food Prices Ease
Andy Burnham Begins Premiership With Two Pound England Bus Fare Cap and Electricity Tax Cut Plan
YouGov Poll Shows Tight Competition Among UK Political Parties
Space Technology Investment Expands Through UK-US Cooperation at Farnborough Airshow
UK Opens Final India Young Professionals Scheme Ballot for Three Thousand Applicants
United Kingdom Approved for Ukraine Financial Support Initiative With EU Partners
UK and Ireland Leaders Discuss Security, Energy and Regional Cooperation
British Heart Foundation Identifies Ten UK Areas With Severe Shortages of Defibrillators
Former Southern Water Executives Charged Over Alleged Water Test Manipulation Scheme
×