Unemployment surge set to hit London as furlough scheme ends

With recent figures from government revealing that London boroughs accounted for four out of the five locations with the highest nationwide percentage of the working population on furlough, experts have voiced concerns London’s poorest residents will be most impacted by the drop off in funding.

According to research from UHY Hacker Young, London’s average rate of furloughed employees across the city stands at 14 per cent. The vast majority of those employees come from the hospitality and retail sectors.

Newham, one of London’s inner boroughs, is right up there with 18 per cent of its working population on furlough.

While the average nationwide is 12 per cent, Haringey, Brent and Hounslow all have 17 per cent of their workers dependent on government funding.

On 1 July 2021, the government dropped its contribution to furloughed employees’ salaries to 70 per cent of their pre-Coronavirus total. But this contribution is due to drop yet again, this time to 60 per cent, on 1 August, with the contributions due to cease entirely on 30 September 2021.

With a wave of redundancies expected in the wake of the scheme’s conclusion, concerns have been raised that London’s poorest residents will suffer. The four London boroughs named among the most dependent on furlough also rank among the city’s highest rates of poverty.

According to data from 2018/2019, 34 per cent of Haringey’s population was living under the poverty line.

Martin Jones, a partner at UHY Hacker Young, noted that the decrease in funding will create further hardship for those who have been most impacted by the pandemic.

“Younger and lower-income people in London have already been hit hardest by the economic effects of the pandemic. That’s only going to get worse when we hit the furlough cliff-edge.

“Calls for another extension are likely to grow in volume as the end of September quickly approaches,” Mr Jones said.He opined that the government may even need to extend the furlough scheme deadline until the end of the year in order to protect the hundreds and thousands of jobs on the line.