First Minister issues job losses warning without Treasury lockdown support

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The UK Treasury has insisted that cost reasons aren’t behind its refusal of a request from the Welsh Government to bring forward the new UK Jobs Support Scheme as Wales approaches a two-week lockdown.

Mark Drakeford wrote to Rishi Sunak calling for the change as part of his decision to introduce a 17-day “fire break” in Wales from Friday. 

He warned workers face losing their jobs if they do not waive the eligibility requirements of its furlough scheme.

The Welsh Labour leader's warning came after Chancellor Rishi Sunak rejected his request to bring forward a new job support scheme by a week to accommodate the start of Wales' two-week lockdown on Friday.

The scheme will cover two thirds of wages for businesses impacted by coronavirus restrictions and is due to start on November 1.

Mr Drakeford argued that businesses forced to close, which includes all non-essential retail, gyms, leisure centres and hospitality venues, would have to wait a week for the new scheme to be introduced. The Welsh Government says it has offered £11m to pay for any costs incurred.

On Tuesday, Mr Drakeford said in a letter to Mr Sunak that people not eligible for the scheme faced redundancy if their employers were unable to access financial support to pay their wages before the newer scheme kicks in.

"Employers with no income will be faced with the difficult decision of paying all of the wage costs of these employees or making them redundant," he said.

"It makes no sense from the point of view of the UK Exchequer to have to meet the possible long-term costs of paying out-of-work benefits to these individuals for the sake of one week's support on the JRS.

"Will you therefore agree in these exceptional circumstances to waive the requirement for employees for whom JRS is claimed for this period to have been on furlough for at least three weeks prior to June 30?"

Mr Drakeford later told the Welsh Parliament he found it "difficult" to understand why Mr Sunak had rejected his earlier request to bring forward the JSS scheme by a week.

The Treasury said it does not believe there is a problem and has insisted that it is not a question of money, with the Chancellor repeatedly saying that he is open to any changes which would work. Officials say that the new scheme will seamlessly replace the current furlough scheme. 

A Treasury source said, “There’s no gap here. The furlough scheme runs to the end of October, the new Job Support Scheme begins on 1st November.”

The Treasury is insisting that anyone who has been on furlough at any time since March can easily go back to it or the new scheme. 

It is thought the UK Government ministers feel the Welsh Government is playing up the idea of a “gap” for political purposes. 

The Welsh Government says it is "disappointed" by the Treasury’s refusal. A spokesperson said. “The UK Treasury has made it clear that all eligible businesses in Wales would be able to access the Job Support Scheme from November 1. The First Minister wrote to the Chancellor to ask that these businesses can access the scheme a week earlier. We have also offered to pay the extra costs associated with this early access.

“Disappointingly, the Chancellor has declined this offer, meaning businesses will now have to access both the Job Retention Scheme and the Job Support Scheme at different points during the fire-break period.

“It is absolutely crucial the UK Government ensures this process is as smooth as possible and that all affected Welsh businesses and employees benefit from these schemes during this difficult time.”

Wales had an estimated 316,000 people on furlough in June Credit: PA

Other political opponents of the UK Government have accused it of not acting in Wales’ interests.

Plaid Cymru is writing to the Treasury to cal for the Job Support scheme to be brought forward and to increase it to the original levels of the furlough scheme.

Plaid's parliamentary leader Liz Saville Roberts raised the issue in the House of Commons yesterday.

“A firebreak gives us the opportunity to buy more time to build up a resilient test, trace and isolate system. But for that to work, the UK Government must also do its part by giving appropriate financial support.

 “It begs the question; would the Chancellor allow people and the businesses in the south of England to go without further support faced with such measures? 

“This is a question of fairness. The people of Wales rightly expect their sacrifices to be backed up with appropriate financial support, so I urge the UK Government to change course.”

The Federation of Small Businesses in Wales also backed the Welsh Government’s stance. 

Ben Francis, FSB Wales Policy Chair, said “This is a common sense suggestion by Welsh Government that could have huge practical benefit for many businesses across the country. Businesses will need to be able to draw this support down to give their workers peace of mind and help pay their wage bills.”