Furlough will cost taxpayers £16bn a month as dozens of big companies jump on Government’s offer to pay staff wages
Taxpayers are facing a wage bill of more than £16billion a month as businesses hammered by the coronavirus outbreak furlough staff.
Dozens of major companies including McDonald’s, British Airways, British Gas owner Centrica and the fashion empire behind Topshop have rushed to take advantage of the Government’s job retention scheme.
This has seen them send millions of workers home – with the taxpayer covering 80 per cent of their wages up to £2,500 a month.
Hand outs: Arcadia, owned by billionaire Sir Philip Green (pictured with wife Tina and daughter Chloe) is among companies to take advantage of the Government’s job retention scheme
The scheme was set up by Chancellor Rishi Sunak to protect businesses and jobs during the pandemic.
But while many of the firms taking advantage are in a desperate situation, some are hugely profitable and have large amounts of cash in reserve.
Experts are worried that the costs for the Treasury are already out of control.
Ministers have deliberately not provided any estimates of how much it may cost to provide these wage subsidies.
Instead Sunak has promised to do ‘whatever it takes’ to rescue the economy and prevent unemployment from soaring.
But the boss of HM Revenue & Customs warned criminals would lodge fraudulent claims for wage subsidies.
Jim Harra said: ‘Any scheme that involves paying out money I’m afraid attracts criminals who want to exploit it and also of course attracts the risk that people who are genuinely entitled to it will inflate their claims.’
The Resolution Foundation think-tank has predicted that between 7m and 10m workers in the private sector will be furloughed.
Economic think-tank The Institute for Fiscal Studies has estimated it would cost around £5billion to furlough 1m staff for three months.
Based on these estimates, it would cost the taxpayer around £50billion if 10m were furloughed for this period.
That is £16.7billion a month – or more than £555million a day.
With no exit strategy in prospect, there are concerns that the lockdown could last even longer than three months.
But experts have said subsidising the wages of millions of workers may be a price worth paying if its prevents unemployment from soaring.
Despite the Government’s radical interventions, however, Capital Economics has predicted the Covid-19 crisis could cause unemployment to more than double from 3.9 per cent to 9 per cent, putting up to 1.7m out of work.