Unemployment has risen again to a five-year high of 5.1 per cent as Rishi Sunak prepares to extend the huge furlough scheme for months more.
Official figures showed that in the three months to December the rate went up by 0.1 per cent compared to the equivalent period to November.
The increase – taking the total on the dole queue to 1.74million – comes despite the huge bailouts in place to prop up jobs, and will fuel fears of a devastating spike when the support is finally withdrawn.
Young people have been by far the hardest hit, accounting for the bulk of the overall rise in unemployment since the start of the pandemic. They made up around three fifths of the 700,000 fall in numbers on payroll over the past year.
However, there were some glimmers of hope in the details released today, with payrolled employees and vacancies increasing slightly month on month.
Furlough is currently due to stop at the end of April, having been implemented during the spring outbreak to prevent millions of job losses at stricken businesses.
The Treasury has already spent around £280billion supporting UK plc through the crisis, and Mr Sunak has made clear he wants to start balancing the books.
But yesterday Boris Johnson strongly hinted the support schemes will continue, insisting the Government has no intention of ‘pulling the rug’ and will ‘continue to do whatever it takes to protect jobs’ for the ‘duration of the pandemic’.
The ‘roadmap’ unveiled by the PM yesterday includes four stages which last until June 21 – suggesting support will go on at least that long.
Mr Sunak said today: ‘I know how incredibly tough the past year has been for everyone, and every job lost is a personal tragedy.
‘That’s why throughout the crisis, my focus has been on doing everything we can to protect jobs and livelihoods.
‘At the Budget next week I will set out the next stage of our Plan for Jobs, and the support we’ll provide through the remainder of the pandemic and our recovery.’
Official figures showed that in the three months to December the rate went up by 0.1 per cent compared to the equivalent period up to November
The ONS figures underlined that younger people have been hardest by the pandemic. This chart shows cumulative change in the unemployment rate by age groups
Chancellor Rishi Sunak is set to extend the massive furlough scheme until at least July. It comes as Boris Johnson gave a strong hint that the massive furlough scheme would be extended again as he unveiled an ultra-cautious ‘roadmap’ for easing lockdown
The roadmap document published by the government yesterday underlines the scale of the hit from coronavirus, which has caused the worst recession in 300 years
The roadmap document points out that young people in particular have been hammered by the lockdowns
ONS deputy national statistician for economic statistics Jonathan Athow said: ‘The latest monthly tax figures show tentative early signs of the labour market stabilising, with a small increase in the numbers of employees paid through payroll over the last couple of months – though there are still over 700,000 fewer people employed than before the start of the coronavirus pandemic.
‘Almost three-fifths of this fall in employees since the onset of the pandemic came from the under-25s, according to a new age breakdown we are publishing for the first time today.
‘Our survey shows that the unemployment rate has had the biggest annual rise since the financial crisis.
‘However, the proportion of people who are neither working nor looking for work has stabilised after rising sharply at the start of the pandemic, with many people who lost their jobs early on having now started looking for work.’
Employment minister Mims Davies said: ‘Today’s figures highlight the challenges people are still facing, but there are glimmers of hope with employment relatively stable, over 600,000 people moving onto payrolls and hours worked up.
‘With the Prime Minister setting out the roadmap to cautiously ease lockdown and the vaccine rollout protecting millions of people, we’re looking ahead to our recovery – our Plan for Jobs is creating new opportunities, boosting skills, and delivering a package of support for people of all ages, getting Brits back into work as we push to build back better.’
Mr Sunak has told Tory MPs that support for some businesses will need to last beyond the summer, particularly for those that will not open any time soon, such as nightclubs.
They added that the Chancellor will present the furlough as an ‘offset’ to the tax rises as he delivers his second Budget on March 3, and is expected to ‘lay down markers’ for future tax rises to start balancing the books.
Corporation tax is set to rise from next year from 19 to 24 per cent, in staggered stages. High earners are also likely to be hit.
An announcement is also expected on freeports, including naming the first ‘three or four’, a source said. The Autumn Budget is expected to be used to announce tax rises to come in from 2022.
Mr Johnson yesterday unveiled an exit strategy from the third national lockdown, with schools to return from March 8 but businesses to continue facing damaging curbs for many months to come.
Pubs and restaurants will be able to serve outdoors from April 12, and gyms can reopen. However, the hospitality sector will not be allowed to operate indoors until at least May, and it is not until June that legal social distancing restrictions might be removed.
In the Commons, Mr Johnson stopped short of confirming outright that support for businesses will be extended, with Mr Sunak due to deliver his Budget next week. But he nodded to the impending closure of the furlough scheme at the end of April, as well as the fact other support is due to lapse.
‘In view of these cautious but, I hope, irreversible changes, people may be concerned about what these changes mean for the various support packages for livelihoods, for people and the economy,’ Mr Johnson said.
‘So I want to reassure the House we will not pull the rug out – for the duration of the pandemic the Government will continue to do whatever it takes to protect jobs and livelihoods across the UK.
‘And the Chancellor will set out further details in the Budget next Wednesday.’
Mr Sunak is also looking at extensions to business rates relief that are due to run out in March.
Mike Cherry, chairman of the Federation of Small Businesses, told the Times: ‘The chancellor must deliver on the prime minister’s ‘whatever it takes’ pledge at next week’s budget.
‘On one side of the coin we have continued restrictions; on the other, we need corresponding business support.
‘Business support measures need to reflect this road map to avoid forcing the great businesses of tomorrow under before they’ve had a chance to realise their potential.’
The roadmap document published by the government yesterday underlines the scale of the hit from coronavirus, which has caused the worst recession in 300 years.
Mr Sunak has told Tory MPs that support for some businesses will need to last beyond the summer, particularly for those that will not open any time soon, such as nightclubs. It comes as Boris Johnson hinted that furlough would be extended again
It points out that young people in particular have been hammered by the lockdowns.
‘Businesses and their suppliers are suffering from enforced closures and restrictions on social contact – particularly aviation, pubs, restaurants and hotels, sports and events, arts, entertainment and conferences – and so are their suppliers,’ the blueprint said.
‘Even though the Government has provided over £280billion in financial support since March 2020, jobs have inevitably been lost given the unprecedented challenge of the pandemic.
‘The number of employees on payroll fell by 828,000 between February and December 2020.
‘The pain has not been felt equally. Staff in the hardest-hit sectors, such as hospitality, are more likely to be young, female, from an ethnic minority, and lower paid.
‘The unemployment rate for those aged 18 to 24 increased from 10.5 per cent in the three months to February 2020 to 13.2 per cent in the three months to November.’
Shadow chancellor Anneliese Dodds tweeted: ‘Indoor hospitality won’t reopen until 17 May at the earliest – more than a month after they have to start paying business rates and more than two weeks after furlough ends.
‘Businesses needed certainty today. Instead this Conservative Government has left them in the lurch again.’
Union warned workers have been left worrying about their jobs after the PM’s announcement because some businesses will not be able to reopen before the furlough scheme ends.
TUC general secretary Frances O’Grady said there could be a gap of months before workers know if they still have a job.
‘The Government must stop dithering and delaying and extend the full furlough scheme for at least the rest of 2021, and it must (give) urgent support for the self-employed.
‘With jobs and livelihoods hanging in the balance there is no reason to keep workers and businesses waiting.
‘We need a plan for supporting the parts of the economy hit hardest by repeated lockdown restrictions, like hospitality, retail, aviation and the creative industries.
‘Ministers cannot watch from the sidelines as companies go the wall.
‘If the Prime Minister wants to make sure we never go into lockdown again, he must do a better job of keeping people safe as they return to workplaces in large numbers’That means beefing up workplace safety guidance so that it’s in line with the latest science and cracking down on employers who put staff in danger,’ she said.