During a recent inquiry, Prime Minister Rishi Sunak explained the decision‑making process behind the adjustment of the UK furlough scheme as the pandemic progressed.
Targeting the support
Sunak was asked how his government tried to make the furlough programme more targeted. He said he and his team spent an “inordinate amount of time” searching for a method that would both help workers and minimise public expenditure while supporting economic recovery.
The effort produced the proposed Job Support Scheme, but the plan was abandoned when another national lockdown was imposed.
He was further questioned on alternative targeting approaches, including sector‑based criteria, the use of non‑pharmaceutical interventions (NPI) and assessments based on revenue impact. Sunak acknowledged these ideas could have been viable but concluded that none provided a comfortable solution.
Ultimately, Sunak chose a strategy he described as “tapering” – a universal increase in the cost borne by employers participating in the furlough programme. He believes this approach “broadly worked quite well”.
Why the decision matters
The choice of a universal tapering mechanism has implications for both fiscal sustainability and employer behaviour. By spreading the cost increase across all participating firms, the government aimed to reduce the fiscal hit without singling out particular industries.
Critics may argue that a blanket approach could disadvantage smaller firms that are less able to absorb higher costs, while supporters contend it preserves the scheme’s simplicity and speed of implementation – crucial factors during a rapidly evolving public health emergency.
Potential next steps
If the tapering model is deemed successful, policymakers could consider applying a similar universal cost‑sharing framework to future emergency support programmes. Conversely, should evidence emerge that certain sectors suffered disproportionately, analysts may advise revisiting more targeted mechanisms in subsequent rounds of aid.
Frequently Asked Questions
What is “tapering” in the context of the furlough scheme?
It is the method of raising the cost for employers in a universal manner for those taking part in the furlough programme.
Why was the Job Support Scheme not implemented?
Because another national lockdown occurred, preventing the scheme from moving forward.
What alternative targeting methods were considered for the furlough support?
Targeting by sector, by non‑pharmaceutical interventions (NPI), and by the impact on revenue were discussed but ultimately rejected as unsatisfactory.
How do you think the universal tapering approach will influence future emergency support policies?
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