Coronavirus Job Retention Scheme costs less than originally predicted
The coronavirus job retention scheme is likely to cost almost a third less than initially forecast, the UK’s public finance watchdog has announced, as figures reveal mostly lower-paid and part-time staff are being furloughed.
In its latest report on the costs of the government’s coronavirus policies, the Office for Budget Responsibility (OBR) revised its overall estimated cost of the furlough scheme down 30%, from £84bn to £60bn.
It is thought that this is because employers are predominantly using the scheme to furlough staff who worked “significantly fewer hours” or were on below average hourly pay.
The OBR initially estimated around 8 million jobs would be furloughed at an average monthly cost of about £1,700.However, although 8.7 million jobs had been furloughed as of 31 May, the average grant per job was around £1,200. This put the average pre-virus weekly gross pay of jobs that had been furloughed at around £320, which was “much closer to the median wage of part-time workers than full-time workers,” the OBR report said.
The latest survey figures from the Office for National Statistics suggested around 27% of the workforce had been furloughed as of 5 April. This jumped to 80% of the workforce in the accommodation and food services industry, a sector where 81% of businesses reported having ceased trading or temporarily closed.