Industry reacts to Govt’s Job Retention Bonus

The Chancellor announced the launch of the ‘Job Retention Bonus’ yesterday as part of the Government’s emergency measures to tackle coronavirus.

Rishi Sunak’s economic statement revealed the Government will pay firms £1,000 for each furloughed employee that returns to work, provided each employee earns at least £520 per month and remains in work until January 2021.

Given over 9.1 million jobs have been furloughed, however, this could cost the exchequer at least £9.1bn, according to Schroders senior European economist and strategist, Azad Zangana.

“A £1,000 bonus per member of staff is unlikely going to make a difference for firms that are no longer economically viable, either due to social distancing restrictions or changing behaviours,” Zangana commented.

“Some firms may now temporarily bring back staff only to collect the bonus and let them go in January, but the majority of the bonus payments will go to firms that had planned to bring back their staff in any case.

“The policy changes announced today will do little to boost wider demand in the economy. The Chancellor may have to return with more measures in the near future.”

Responding to the announcement, chair of the Chartered Institute of Taxation tax policy and oversight committee, John Barnett, praised the creation of the Coronavirus Job Retention Scheme (CJRS), and was hopeful the bonus could build on the scheme already in place.

“We hope that HMRC can build on their expertise in creating the CJRS grant claim portal by adapting it to deliver the Job Retention Bonus to employers next February too,” he said.

“They have been rightly praised for their speedy and effective delivery of the CJRS and self-employed schemes, but this has been at the cost of delays in other parts of HMRC’s work. We are concerned that, without extra resources, the delays now being suffered may continue into 2021.

“It appears that the bonus will be available for any employee who has been furloughed at any point, not just those still on furlough at the end of the CJRS. This is generous, but understandable, as otherwise it would provide an incentive to employers to keep people on furlough until the very end rather than bringing them back to work.”

Trades Union Congress general secretary, Frances O’Grady, suggested the Government’s support should instead have been more targeted to help the sectors worst affected by COVID-19.

“Mass unemployment is now the biggest threat facing the UK, as shown by the thousands of job losses at British Airways, Airbus and elsewhere,” she commented. “The Government must do far more to stem the rising tide of redundancies. We can’t afford to lose any more good skilled jobs.

“The Chancellor should have announced targeted support for the hardest-hit sectors like manufacturing and aviation. Struggling businesses will need more than a one-off Job Retention Bonus to survive and save jobs in the long-term.”

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