Now is the right time to start unwinding the furlough scheme

The Government brought in a range of measures to support businesses during this crisis, but the one of most immediate significance for the 6.3 million ‘furloughed’ workers is the Coronavirus Job Retention Scheme (CJRS). Changing this scheme is now crucial to the recovery of the UK economy, as the Chancellor of the Exchequer is well aware.

The CJRS was put together hastily, and naturally has imperfections. The conditions for its use have had to be changed several times, for instance to backdate eligibility and to allow people who have left jobs to be ‘re-employed’ and thus eligible to be furloughed by their previous employer. There are inevitably hard cases where people have been excluded from eligibility, or where the terms of the scheme disadvantage some groups of workers.

The scheme is not unique. It is a special case of a wage subsidy programme, of which there have been many in the past, in the UK and elsewhere. Such schemes have inherent dangers. One is fraud, about which Rishi Sunak is said to be very concerned. There are significant potential opportunities for fraud, for example claiming for ineligible or non-existent workers, side-payments for ‘employers’ who declare workers furloughed, and having furloughed workers continuing to work for the employer despite the rules.

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