The government are prepared to pay £409.89 for every worker made redundant due to COVID-19.
If they just underwrite salaries by that, monthly, problem would be solved.
The new system is this:
You work a third of your hours. You lose a sixth of your pay.
You work a third of your hours, employer pays for those hours.
The 2/3 hours you don't work, the government pays for A THIRD of THOSE hours, your employer pays for a THIRD of those hours and you take a haircut for a THIRD of those hours.
So, overall your employer pays 55% of your salary, the government tops it up 22% and you lose 23%.
Current furlough is you pay your staff 80% of their salary, to 'not work' for the hours they don't work, and the government pays 60%
Here is it broken down into real numbers:
To compare the two, lets assume an employee earning £300 a week, working a third of their hours.
In both schemes the employer pays for those hours. So £100.
Currently the government pays £120. Your employer pays £40 and you take a £40 pay cut. Total salary £260, government contribution £120, employer contribution £140.
Under the new scheme the government pays a third of the £200. So £66. As an employer we pay a third - so £66. And you take a £66 paycut.
Total salary £233.33. Government contribution £66.66, employer contribution £166.66.
If an employer topped up the salary so you were not out of pocket - which is what we did through furlough - it means an employer would be paying £233 for £100 work of work. And that's obviously not sustainable for most low margin industries.
Under this system the government pays £266.64 to keep that worker off benefit. To avoid paying £409.89. So I can see how it works for them.
Because currently they pay £480.
Here's the thing though. Universal Credit also means they have to pay housing costs, child credits - a whole load of extra money that they save by keeping people in work.
This is a false saving. I can see that. Why can't they?