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Sep 22, 2020

News | Business | Bank of England: Bank of England boss calls for furlough 'rethink'

 

3-4 minutes - Source: BBC


A young woman looks at her phone Image copyright Getty Images

The governor of the Bank of England has called for the government to "stop and rethink" the furlough scheme.

The Job Retention Scheme is due to finish at the end of next month.

But speaking on a webinar hosted by the British Chambers of Commerce, Andrew Bailey suggested some sectors may benefit from further targeted help.

In August, Mr Bailey told the BBC he backed ending the current scheme, saying workers should be helped to move rather than stay in unproductive jobs.

But on Tuesday, he said: "Why I said it is sensible to not continue the current scheme is the precisely the point."

Mr Bailey said he did not want to "tie the chancellor's hands", stressing any changes were decisions for the government.

'Completely inappropriate'

"We have moved from a world of generalised employment protections, to specific and focussed areas." He said it was important to target specific issues affecting the economy.

But he said: "It would be completely inappropriate of me to do anything to tie the chancellor's hands, it's a very difficult situation we're in at the moment and I fully support the decisions that he's taken."

"Furlough has been successful and I congratulate the chancellor [Rishi Sunak]," Mr Bailey said, adding that at the peak of the crisis, around 30% of private sector employers were using the scheme.

"It has helped manage the shock, to firms and to labour," he said. But now, he added: "The use of it, as far as we can tell, is more concentrated."

Earlier in the day, Whitbread, which owns Premier Inn and Beefeater, announced plans to cut 6,000 staff just days after the furlough scheme is due to end in October. Meanwhile Wetherspoon said it would shed up to 450 workers at pubs in airports.

And Mr Bailey's comments were made just hours before the Prime Minister Boris Johnson took to his feet in the Commons to reinstate guidance that office workers stay at home and confirm that pubs and restaurants will be forced to close at 22:00 from Thursday. UK Hospitality said the move was "effectively a lockdown" for city centre bars and restaurants.

"This is a huge, huge blow to hospitality and it will be potentially fatal for many businesses," it said.

Mr Bailey's comments echo the opinion of Labour leader Sir Keir Starmer, who has called on the government not to remove all support in one go.

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