CHANCELLOR Rishi Sunak admitted yesterday that his £9 billion job retention bonus risks wasting taxpayer money.
There were questions over the value of the scheme after it emerged that the top civil servant in HMRC said it is “highly uncertain” how many jobs it would save.
Jim Harra had to ask the Chancellor for a formal “ministerial direction” to sign off on both the £1000-a-worker handout and the Eat Out To Help Out discount voucher programme.
The job retention bonus will hand employers £1000 for every furloughed worker who is still on the payroll in January and could cost up to £9bn. Harra warned that the “overall cost of the scheme and the number of extra jobs it would protect” were both “currently highly uncertain”. “That uncertainty also applies to the efficiency of the measure,” he added.
Yesterday, The Resolution Foundation think tank said their analysis was that eight out of nine furloughed workers were set to keep their jobs anyway.
“The Job Retention Bonus of £1000 for firms that bring back furloughed workers and still employ them in January will not make a major difference to employment levels,” the think tank said.
It added: “The significant deadweight cost, with payments mainly going to firms who would have brought back those workers anyway, is best thought of as cash grants to firms in the sectors that were hardest-hit by this crisis.”
Pushed on the efficiency of the scheme yesterday Sunak said: “There are a million different businesses that are accessing the furlough scheme so they’re all going to be in a slightly different set of circumstances. But we’ve looked through the earnings distribution of the furlough population.
“And, given that, I believe that the thousand pounds will serve as a significant reward and incentive to many, many companies up and down the country and make a difference to those jobs being saved and help businesses ease through what is without question a difficult time.“
Pushed on the prospect of employers who would claim the money even if they were planning on taking workers off furlough anyway, the Chancellor said: “I think that’s absolutely a fair point.”
He added: “Without question there will be dead weight, and there has been dead weight in all of the interventions we have put in place, and there will be some degree of moral hazard.”
The shadow chief secretary to the Treasury Bridget Phillipson said: “The Government have had months to prepare for the end of lockdown and design targeted support to protect jobs – but instead we have an on-the-hoof fix that the Chancellor himself admits risks wasting billions of pounds of taxpayer money.”
It was a grim day for a number of workers yesterday with more than 10,000 jobs lost as John Lewis, Burger King, Boots and Rolls-Royce all confirmed redundancies.
Sunak said he was “anxious” about the state of the economy.
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