THE introduction of the furlough scheme as the coronavirus crisis developed is surely by far the most sensible thing the Conservatives have done from an economic perspective in nearly a decade since coming to power.

Their protracted period in power can be characterised generally as one of many, many economic mistakes and a blinkered approach to the effects. It has also been punctuated by episodes of absolute shambles.

The Tories’ grinding austerity programme has been entirely counter-productive, weighing heavily on the economy throughout the period. As well as being savage in scale, the mix has also been all wrong, with welfare cuts hammering those on the lowest incomes who have to spend all of their money to live and thus subtracting directly from aggregate demand.

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And then we have had the ideologically driven Brexit circus. This has proved to be another major drag on growth, creating huge uncertainty and dampening business investment which had in any case failed utterly to take off in the way the Tories had presumably envisaged when they embarked upon their huge cuts in corporation tax.

So the bar had not been set at any kind of height at all by the Conservatives in terms of economic decision-making.

But credit where it is due: the UK Government’s move to put in place its huge furlough scheme, days before implementation of full lockdown on March 23, has been a very good move indeed.

Lockdown measures have been essential to slowing the spread of Covid-19 and saving many thousands of lives, with large parts of the economy closing altogether and others much-reduced. Saving lives must remain at the forefront of everyone’s minds as lockdown measures are eased.

The coronavirus job retention scheme, through which the UK Government has been paying 80 per cent of the wages and salaries of furloughed employees up to £2,500 a month, has protected millions of jobs. Figures last week showed that 8.4 million furloughed workers were being protected by the scheme, with around one million employers having been assisted by the programme.

The huge furlough assistance has been so, so crucial in the efforts to ward off mass unemployment, as these numbers demonstrate beyond any doubt. The unemployment figures have nevertheless been grim, highlighting financial misery for hundreds of thousands of people who have lost their jobs completely since the Covid-19 crisis started to unfold.

Figures published last month by the Office for National Statistics show the number of people in the UK claiming benefits because of unemployment surged by 856,500 or 69% between March and April to 2.097 million, exceeding two million for the first time since 1996. In any kind of normal times, such a single-month jump would be inconceivable.

In Scotland, the number of people claiming benefits because of unemployment surged by around 75,000 between March and April to 186,000.

Without in any way underplaying the huge misery evident in these unemployment numbers, it does not bear thinking about how much worse these figures would have been had it not been for the furlough scheme.

However, while the scheme has provided huge security for millions of people through this extraordinary crisis, changes unveiled to the way in which this will operate between August and October will be a source of worry for huge numbers of people.

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Chancellor Rishi Sunak, having flagged the move earlier last month when he announced an extension of the scheme, on Friday outlined the amounts that employers would be required to contribute to the programme between August and October. The amounts increase incrementally over this period, as UK Government provision is scaled back.

The Government has highlighted the major cost of the furlough scheme, which will run to tens of billions of pounds in total. It is therefore easy enough to understand from its perspective why it wants employers to share the cost as we move through this crisis. And the Government would argue it is still bearing the lion’s share of the cost of furloughed employees right up until October.

Many people might look at employers and think that, if they wish to retain workers over the long term, they should demonstrate a commitment by making a financial contribution.

The UK Government has been at pains to show the employer contribution will be a relatively small part of the overall cost of the scheme. The Treasury puts the average contribution being required from businesses in August at 5% of the gross employment costs they would have borne had a worker not been furloughed, through payment of employer national insurance and pension contributions.

In October, by which time the Government contribution will have reduced to 60% of wages and salaries up to only £1,875 a month under the plans announced on Friday, the average contribution of businesses is put by the Treasury at 23% of the gross employment costs that would have been incurred had the worker not been furloughed.

It is worth noting that some employers are already contributing to the earnings of furloughed workers by topping up their pay beyond what is being covered currently by the Government scheme.

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However, in a more general sense and in the context of the contributions being required by the UK Government from August, all of the points about it being good for employers to contribute or show a commitment are cold comfort for the many thousands of businesses which by August are still likely not to be operating at all. These philosophical points are also irrelevant to millions of furloughed employees whose job security looks likely to be diminished by the “tapering” of the Government assistance.

One-quarter of UK businesses with furloughed staff surveyed by the Institute of Directors have signalled they will not be able to afford to contribute anything to the furlough scheme between August and October.

While many businesses are reopening or are preparing to do so, many, such as those in the hospitality sector, still look likely to face a particularly long wait before they are able to restart. The Scottish tourism industry has been among those to voice worries about what this will mean for jobs.

The fact of the matter is that, for businesses that are closed and have no money coming in, most will be unable to contribute to the furlough scheme. What is more, in the likes of the tourism sector as well as many others, it remains very difficult for businesses to forecast when they will be able to reopen and/ or return to something resembling normality in terms of activity levels.

Those businesses unable to operate at anything like full capacity would also be likely to face major problems in meeting the contributions to the furlough scheme outlined by Mr Sunak.

It is therefore against this obvious backdrop difficult to see what is driving the impatience to start asking businesses to contribute. The UK Government might desire contributions, but that is different from thinking that requiring them is a sensible move. It remains difficult to escape the impression that the hurry is being driven in large part by the Conservatives’ instinctive opposition to large-scale state support for those in need.

The cost of the furlough scheme is obviously huge but that must have been known from the outset. The furlough scheme has been a practical one, put in place as restrictions to slow the spread of Covid-19 and save thousands of lives forced many businesses to suspend or scale back operations. For some reason, it seems to have become something of a political football, but it should not be.

Large parts of the economy remain closed and others much-reduced. Hopefully, if we can avoid a second wave of coronavirus, the economy will be reopened gradually and the number of businesses and workers reliant on the furlough scheme will reduce sharply over time. This will cause the ongoing cost to fall sharply.

Tens of billions of pounds is a major cost in terms of the public finances. However, to put it into context, the UK’s public sector net debt had surged from around £1 trillion when the Conservatives came to power in 2010 to about £1.8 trillion, before the coronavirus pandemic hit the UK.

In any case, relative to the overall ultimate cost of the furlough scheme, the employer contributions being sought will be a small part. This means that there is a strong argument for the state continuing to bear the whole cost, or at the very least for some kind of means-testing and contribution exemptions for certain sectors.

After all, the short and medium-term cost of triggering additional major job losses by forcing the hands of employers which cannot afford to put up money or do not want to take the financial risk of contributing to the furlough scheme amid the huge uncertainty is likely to be huge.

Some flexibility has been introduced, to facilitate a return to part-time working. And this is being done earlier than planned, from July. However, this will not be enough in terms of avoiding huge job losses if the Government forces employers’ hands.

Some big companies are, sadly, already announcing large-scale job losses. Some will have little choice but others will have options. Hopefully, many businesses will treat this unprecedented situation in an extraordinary way, looking through the immediate financial turmoil and retaining staff where at all possible.

Unfortunately, some seem already to be reverting to standard cost-cutting behaviour. That is, they are dealing with an extraordinary situation with the very ordinary, pedestrian and unimaginative behaviour of taking a big percentage out of costs. Such employers do not need any further encouragement to axe jobs, and in this context the proposed changes to the furlough scheme ring alarm bells.

There are also many businesses which will want to do the right thing by their employees. For huge numbers of them, the furlough scheme in its current form will be enabling them not to trigger job losses that might otherwise be necessary, buying them time to see how things pan out.

For those businesses willing to bide their time, and look ahead to a return to something near normality when they will be able to take perhaps all or at least the vast bulk of their employees back on full time, it is crucial the UK Government is also willing to be patient.

There looks to be a huge danger that much of the good achieved through the furlough scheme could be obliterated by huge job losses caused by changes to the programme which might only yield a few billion pounds. This might sound like a lot of money but it is small in the context of the overall cost of the programme.

The Conservatives might want to reflect on the following idiom: “Do not spoil the ship for a ha’porth of tar”. And quickly.