Extending furlough scheme would 'pay for itself' and save 61,000 jobs, Scottish Government says

Extending the furlough scheme by eight months could “pay for itself” by saving 61,000 jobs and increasing GDP, the Scottish Government has claimed.

Analysis carried out by the Scottish Government estimates that the cost of extending the UK Government’s Coronavirus Job Retention Scheme in Scotland up to June 2021 would be around £850m.

Scottish ministers have called on the UK Government to extend the scheme which is due to end in October with around 217,000 Scots estimated to still be furloughed

The report comes as quarterly statistics show Scotland’s GDP has shrunk by 19.4 per cent and the UK’s by 20.4 per cent.

The analysis claims that even a temporary extension of the scheme would have “persistent, positive impact on the labour market, preventing unnecessarily higher levels of unemployment over the next few years.”

The cost to extend furlough for the same length of time across the UK was estimated at around £10bn.

The report highlights examples in other countries of governments choosing to extend some version of a furlough scheme into 2021 and beyond.

It also says that alternatives such as a limited extension targeted at worst-hit sectors like tourism and hospitality could be explored.

The report concludes: “if managed well, wider economic benefits from the extension mean that it could pay for itself, increasing GDP and potentially lowering debt as a share of economic output over 2020 and 2021”.

Economy Secretary Fiona Hyslop said: “The UK Government must think again about withdrawing blanket support and they must urgently implement some form of extension which would continue to provide help for the sectors that have been most heavily affected.

“Extending the Job Retention Scheme for eight months would save 61,000 jobs in Scotland and help secure a stronger economic recovery from coronavirus. Unlike the Scottish Government, the UK Government has the borrowing powers necessary to fund the extension of the Job Retention Scheme and they must act now to protect jobs and livelihoods.

“New furlough statistics for Scotland published today show wide variation between different sectors of the economy.

“Even though in some sectors a significant number of people have gone back to work, the outlook is much bleaker in other sectors. In accommodation and food services an estimated 34.4 per cent of staff were still on furlough, and this rises to 57.5 per cent of staff in the arts, entertainment and recreation sector.

“Of course, the furlough scheme cannot continue indefinitely, but an extension would help keep people in jobs while sectors of the economy currently unable to fully open recover and will lead to sustained economic benefits at a relatively small cost.”