THE UK taxpayer is picking up the wage bills of nearly nine million furloughed workers, who are unable to do their jobs because of the coronavirus pandemic.
Around £17.5 billion has been claimed by more than one million firms who have sent their colleagues home as the country went into lockdown in March in a bid to slow the spread of the deadly virus.
New figures from HM Revenue and Customs released show that, as of Sunday, 8.7m jobs had been furloughed; this was a rise of 300,000 from a week earlier when £15bn was claimed.
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In March, the Government promised to pay 80% of the salaries – up to £2,500 a month - of workers sent home because they could no longer do their jobs with public health restrictions in place.
The Job Retention Scheme was designed to allow companies to keep staff on the payroll, so that when the lockdown was over, these workers could help the economy bounce back.
However, experts worry that the scheme could simply be disguising massive unemployment with sweeping layoffs potentially on the cards after it ends at the end of October.
Last week companies were told they would have to start contributing some of the pay given to employees, to slowly start weaning the economy off Government support.
Rishi Sunak announced businesses would have to bear some of the costs and start paying National Insurance contributions from August. The Chancellor also said that staff would be able to return to work part-time without losing any furlough pay from next month.
"We stood behind Britain's businesses and workers as we came into this crisis and we stand behind them as we come through the other side,” declared Mr Sunak.
"Now, as we begin to re-open our country and kick-start our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world," he added.
New figures also revealed that 2.5m claims totalling £7.2bn had been made under the Government’s scheme to support self-employed people.
Meanwhile, more Government data showed British businesses had borrowed more than £30bn from three Government-backed coronavirus loan schemes as firms try to stay afloat during the crisis.
Nearly 750,000 businesses have been approved for loans worth more than £31.3bn. The data, which runs up to Sunday, revealed more than 963,000 businesses had asked their banks for support as part of the schemes.
Figures showed £21.3bn had been lent to nearly 700,000 firms under the Government's bounce-back loan scheme.
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A further 74,000 businesses have not yet been approved for the loans, which require minimum checks and can give a business up to £50,000 in their account within days.
The Government has promised to step in to pay back 100% of the loans handed out by High Street lenders, such as Lloyds and Barclays, as part of the scheme.
However, experts have warned that the taxpayer could be left with a hefty bill for the bounce-back loans if small businesses start defaulting on their debt to the banks.
Last week, Sir Howard Davies, the Royal Bank of Scotland Chairman, called for the creation of a holding vehicle that could suck up all the bad debt from the banks.
He warned that "several billion pounds of public money" might never be paid back to the banks.
Fewer concerns have been raised about the Government's two other schemes, the coronavirus business interruption loan scheme[CBILS] and a similar scheme aimed at larger businesses, called CLBILS.
The Government only guarantees 80% of these loans and banks are required to do more in-depth checks on the companies that have applied for the cash.
Tuesday's figures showed that more than £8.9bn has been lent to nearly 46,000 companies under CBILS, and a further £1.1bn to 191 companies as part of CLBILS.
The total taxpayer-funded aid package, involving the schemes for furloughed workers and the self-employed, together with the loans schemes, totals thus far £56bn.
Elsewhere, Bank of England figures showed the number of mortgage approvals made to home buyers fell to a record low in April.
The Bank’s Money and Credit report revealed some 15,848 mortgage approvals for house purchase were recorded, which was around 80% below February levels before the coronavirus crisis took hold.
This was around half the number of approvals taking place in the trough during the 2008 financial crisis and was the lowest since the figures started in 1993, the report said.
It noted: "Weakness in the housing market associated with Covid-19 was reflected in weak mortgage market activity in April."
The report also showed that households made a net repayment of £7.4bn in consumer credit in April; the largest net repayment since the series of snapshots began.
The majority, some £5bn, of net consumer credit repayments were on credit cards while £2.4bn of other loans were also repaid in April.
The report said the "extremely weak" net flows of consumer credit meant that the annual growth rate fell below zero in April to minus 0.4%; the weakest since August 2012.
With lenders offering £500 interest-free overdraft buffers to borrowers whose finances have been hit by coronavirus, the "all-in" cost of overdraft borrowing fell sharply in April as lenders removed fees and held rates low.
The typical rate on overdrafts, including fees, was 10.93% in April, around 15 percentage points lower than in March.
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