Dear Rishi
As the tapering of the Coronavirus Job Retention Scheme (CJRS) takes effect next week, I wanted to share with you again my grave concerns about the approach you are taking, and to warn you of the devastating impact that the closure of the scheme at the end of October will have.
As you will be aware, there are currently 1.39 million furloughed employments in London and 32 per cent of all eligible employments in London have been furloughed. Our analysis of official HMRC data on the CJRS shows that the highest numbers of furloughed employees are disproportionately located in London’s more disadvantaged areas. Furthermore, it is the youngest employees that are most likely to be furloughed. To a lesser extent, older Londoners are also over-represented.
Many businesses in London’s retail, hospitality, creative and cultural sectors are already on a financial knife edge. In these sectors in particular, and especially in London’s central activities zone, we will not see business return to pre-pandemic levels for as long as social distancing remains necessary. It will be impossible for them to maintain staffing levels as the CJRS continues to taper and ultimately end.
As leading voices from the business community have also pointed out, when the scheme ends we are likely to see a significant number of redundancies among previously furloughed employments. The result of this is certain to be a spike in unemployment affecting some of London’s poorest areas, and its most disadvantaged residents. I am sure this picture will be similar across the country. You will be aware that economists at JP Morgan have predicted that as many as 1.8 million nationally could be facing redundancy under your current plans.
It is not too late to change course and avoid a sudden unemployment cliff edge at the end of October. As you will know, Germany has recently announced the extension of its support for furlough until the end of next year, following France.
I am therefore urging you to follow their example to help save jobs, and announce an extension of government support - at the very least to those sectors of the economy most affected by the pandemic and which are unable to do business sustainably for the foreseeable future, such as retail, hospitality, leisure and the creative industries.
Yours sincerely,
Sadiq Khan
Mayor of London