Against a backdrop of increasing pressure on the government to provide continued support as the foreclosure measures are gradually lifted, the Resolution Foundation said the extension would cost the public treasury up to £ 48 billion but would prevent a further outbreak unemployment.
After Boris Johnson announced his plan for the gradual lifting of restrictions on Sunday, industry groups warned that it was incomplete without urgent details on the job retention program.
Lex Butler, president of the Association of Hotel Reservation Agents, said, “We must immediately know that the leave plan will be extended beyond the end of June and under what conditions. We need clarity now to avoid large-scale closings and job losses. “
Hotel workers are expected to return to work last, possibly starting in July.
Adam Marshall, Managing Director of British Chambers of Commerce, said: “Businesses should know that government support programs, which have saved millions of jobs in recent weeks, will continue as long as they are needed so you can plan ahead with confidence. “
Johnson told parliament on Monday that Sunak will announce details of the plan’s future on Tuesday. The Chancellor is expected to widely announce the phasing out of the program amid growing concern over its cost, which is around £ 14 billion a month.
Under this program, workers receive 80% of their wages up to £ 2,500 per month. Over 6 million people were protected in 800,000 businesses during the first two weeks of the program.
Options considered by the Treasury include reducing the level of support to 60% while allowing staff to work part of their hours.
The Resolution Foundation urged the government to allow “partial leave” as early as June, but said 80% support should also be maintained in the economy as a whole until at least August. It could then be gradually reduced.
However, the thinktank recommends that 80% support continue until at least September for companies in sectors where return to work will take longer, including hotels.
Sunak is under pressure from business leaders to provide an update this week as employers must allow at least 45 days to consult on layoffs of more than 100 employees. Businesses face May 18 to begin the layoff consultation process if leave is no longer available in July.
Torsten Bell, the executive director of the Resolution Foundation, said: “Acting too quickly could trigger a huge second wave of job losses at a time when unemployment already appears to be at its highest level in a quarter of a century.
“However, the program cannot last forever. It should be phased out, with a longer deadline for the most affected sectors. “
Johnson said on Sunday that it was time for sectors in which homework was not possible – including manufacturing and construction – to return to work.
But the British Metallurgy Confederation (CBM), which represents around 200 manufacturing companies across Britain, said it would take longer for the economy to recover and more financial support is needed then that production levels remain below normal.
The CBM said that up to 30% of the jobs (12,000) among its members could be lost if the aid was cut in late June.
Financial lobby group TheCityUK has said it expects UK companies to face unsustainable debt of up to £ 105 billion which should be managed before March next year.
In addition to continued government support, the Bank of England has ordered large street banks to make more business loans to help them operate.
A spokesperson for the Treasury said the job retention program had already protected millions of jobs.
“Future decisions about the program will take into account the broader context of the measures in place, as well as the public health response,” they said. “We have been clear that there will be no cliff and people will be reintegrated into work in a measured way. “