Rishi Sunak 'to set out plans next week to wind down furlough'

Rishi Sunak will set out next week how he intends to ‘wind down’ the government’s coronavirus furlough scheme amid fears within Whitehall that the nation is becoming ‘addicted’ to state help.

The Chancellor is widely expected to start to reduce the scale of the scheme from July after it emerged it has a current monthly cost of approximately £8 billion, covering more than six million workers.

Mr Sunak has said such a bill is ‘not sustainable’ in the long term and he is in the process of figuring out how best to reduce support.

One way forward could see the level of wage support reduced from 80 per cent to 60 per cent while the monthly cap of £2,500 could also be lowered.

Experts believe the final bill to taxpayers for the scheme could end up being more than £40 billion.

The Chancellor is adamant workers will not face a ‘cliff edge’ of financial help being totally removed.

It is thought he could therefore choose an approach which would see subsidies reduced for different sectors of the economy at different times as they reopen for business.

Rishi Sunak will reportedly announce next week plans to reduce the goverment’s furlough scheme from July

Downing Street this week revealed the monthly cost of furlough is £8 billion. The NHS has a monthly budget of approximately £11 billion

Experts recommend over-70s should remain in lockdown

Over-70s and vulnerable people should remain in lockdown when the draconian social restrictions are lifted, scientists advising the Government have insisted.

The Edinburgh and London researchers have called for a ‘two tier’ action plan which would see the elderly and those with chronic conditions kept apart from society.

They say the approach, dubbed ‘segmentation and shielding’, is the only way to get the UK back to normal without overwhelming the NHS and causing a second wave.

Healthy Britons would be allowed back out, but stringent contact tracing, social distancing and strict hand washing rules would need to be in place.

Anyone with symptoms would need to quarantine along with their entire household for two weeks.

The study, which used modelling to predict the virus’ spread after lockdown, did not say how much longer elderly people would need to stay cooped up at home.

However, it was reported last night that the Government is planning to dismiss the report and allow over-70s the same freedoms as the rest of the UK.

The furlough scheme currently allows employers to claim 80 per cent of a worker’s wages, up to a monthly cap of £2,500.

More than 800,000 firms have made applications to the initiative, covering some 6.3 million workers.

Analysis published yesterday showed more than 50 per cent of British adults are now receiving some form of money from the state.

There have been more than 1.8 million new claims for Universal Credit since the middle of March and if the unemployed, 5.4 million public sector workers and 12 million pensioners are taken into account, the state now helps over half of the UK’s 52 million adults.

There are growing fears within the government that if the furlough scheme remains in place for too long it could act as a disincentive to going back to work and result in a prolonged over-dependence on state help.

A senior Government source told The Times: ‘People are addicted to the scheme.

‘We’re not talking about a cliff edge but we have to get people back to work.’

The newspaper reported that Mr Sunak is weighing up the merits of a three stage approach to easing off the furlough scheme.

The first would see small shops and outdoor workplaces allowed to reopen with subsidies reduced when they do so.

The second would then see large shopping centres reopen their doors and the third would relate to pubs, restaurants, hotels and leisure centres.

The sections of the economy last to get back up and running would be able to access furlough support for the longest period of time as it is gradually wound down.

Scotland refuses to commit to NHS contact tracing app

The Scottish government has dealt a potential hammer blow to Matt Hancock’s coronavirus contact tracing app as it said it will only commit to the technology if it is shown to work and is secure.

The app is a key piece in the government’s plan to get the UK out of lockdown and back to work and will need at least 60 per cent of the nation to download it for it to be effective.

But Nicola Sturgeon has said she is ‘cautious’ about the app and has stressed Scotland’s approach to stopping the spread of the disease will be more ‘old fashioned’.

Meanwhile, Professor Jason Leitch, Scotland’s national clinical director, said he will only download the app ‘once I’m confident that it works’ and the ‘security is good’.

Should Scotland refuse to recommend the app it will undoubtedly hit the UK government’s efforts to hit the 60 per cent threshold.

It came amid growing concerns over the way in which the app works and the data it will collect with experts warning Mr Hancock it is ‘almost inevitable’ he will face a legal challenge.

Civil liberties campaigners and barristers are demanding the government legislate to restrict the way in which the data collected by the app can be used.

Some are concerned that the lack of regulation could result in the movement of people data eventually being used to identify anyone who is not sticking to social distancing rules so they can be punished.

Paul Johnson, head of the Institute for Fiscal Studies, said the Chancellor will need to strike a careful balance between being too generous and too stingy.

He said: ‘If you remove it quickly you risk a wave of unnecessary redundancies.

‘If you are too generous then you risk a longer, deeper recession and a bigger hit to the public finances.’

The current version of the furlough scheme is due to last until the end of June.

Experts believe it could ultimately cost the taxpayer in excess of £40 billion.

It was claimed yesterday that the Chancellor could opt to cut the support from 80 per cent of wages to 60 per cent as part of the plan to get Britain back to work. The £2,500 limit could also be reduced.

Another option would see furloughed staff allowed to go back to work but they would only receive a smaller state subsidy.

Furloughed workers are currently prohibited from performing their duties with the scheme designed to maintain a link between employers and employees.

Downing Street did not deny that wage support could be tapered.

The Prime Minister’s Official Spokesman said the Chancellor was ‘working on the most effective way to wind down the scheme to ease people back into work in a measured way’.

In an interview on Monday night Mr Sunak tried to reassure workers and businesses that they will not face a ‘cliff edge’ of subsidies being withdrawn immediately when lockdown measures are eased.

But amid signs of strains within government about the huge burden on the country’s finances, Mr Sunak pointed out that the furlough scheme could soon be costing the same as the NHS budget – an estimated £11 billion a month.

‘I’m working, as we speak, to figure out the most effective way to wind down the (furlough) scheme and to ease people back into work in a measured way,’ he told ITV.

The number of UK adults now receiving money in some form from the state is now approximately 27 million out of a total adult population of 52 million

Chief Scientific Adviser admits UK failed to ramp up testing quick enough

Britain should have carried out mass coronavirus testing on the public at the beginning of the current crisis and carried it on, the Government’s chief scientist has said.

Sir Patrick Vallance, the Chief Scientific Adviser to Downing Street, admitted yesterday that it ‘would have been beneficial’ to get a handle on testing faster.

Today a senior minister admitted that ‘capacity constraints’ earlier in the coronavirus crisis meant contact tracing among the public was abandoned in March.

Security Minister James Brokenshire conceded a higher capacity for testing at the start of the Covid-19 outbreak could have allowed continuing widespread checks in the community.

When the first cases of the coronavirus appeared in the UK every person suspected of having it was being tested and any positive cases were quarantined.

However, as the infection spread, the Government gave up trying to test everyone.

On March 12, officials announced testing would be limited to patients and staff in hospitals so that authorities could focus on preparing hospitals for the surging outbreak.

That policy continued for six weeks until April 28, when testing was expanded to key workers and over-65s with symptoms, and later to those without signs of the illness.

Mr Brokenshire told the BBC’s Today programme: ‘Would there have been benefit in having that extra capacity, as Patrick Vallance highlighted yesterday? Yes.’

Speaking to MPs yesterday, Sir Patrick said: ‘I think that probably we, in the early phases – and I’ve said this before – I think if we’d managed to ramp testing capacity quicker it would have been beneficial. For all sorts of reasons that didn’t happen.’

‘As some scenarios have suggested, we are potentially spending as much on the furlough scheme as we do on the NHS, for example.

‘Clearly that is not a sustainable situation.’

Analysis in The Daily Telegraph suggested around 27million adults – around 53 per cent of the total – are now receiving some form of financial assistance from the Government.

The figure is made up of furloughed workers, people claiming benefits, pensioners and public sector workers.

Former Tory chancellor Lord Lamont of Lerwick told the Telegraph: ‘It is not practical and not affordable for the state to pay people not to work – ultimately the Government only has the money it gets from taxation from people who create the wealth.

‘It is not a sustainable position except in the short term.

‘It illustrates the danger and precariousness of our situation.’

Today it emerged that more than 69,000 small businesses had loans approved under the Government’s new bounce-back loan scheme in the first 24 hours after it launched on Monday.

The loans, valued at more than £2 billion in total, were available to small businesses who wanted extra support during the coronavirus crisis.

The Treasury said that the seven biggest lenders had more than 130,000 applications between them.

On Tuesday, Lloyds Banking Group revealed that it alone had approved loans of £1 billion to 32,000 small businesses on the first day.

Mr Sunak said: ‘Small businesses will be the driving force of our recovery from the pandemic, creating jobs and securing economic growth.

‘These loans will help them bounce back from this crisis – getting money fast – so it’s great to see close to 70,000 businesses benefiting in just the first day.

‘It’s vital this speedy progress continues in the days and weeks ahead.’