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Serious doubts over whether new wage support scheme will prevent 1980s levels of unemployment

RISHI SUNAK’S latest emergency package of wage support for sectors hardest-hit by the pandemic will not be enough to stop unemployment levels last seen in the 1980s, Labour warned today.

Shadow chancellor Anneliese Dodds said that his latest measures, which will replace the job retention scheme that paid 80 per cent of furloughed employees’ wages, will not save masses of jobs from being lost.

On Thursday, Mr Sunak announced the new job support scheme, which would see the government and employers help to pay wages for employees able to work at least a third of their hours. 

The scheme will last for six months from November.

A worker doing a third of their normal hours will receive 77 per cent of their usual pay. The government would pay 22 per cent while the employer covers 55 per cent.

Other measures included in the package include an extension of the VAT cut for tourism and hospitality, and more flexible terms for the repayment of government-backed loans.

Ms Dodds said the “million-dollar question” was whether the wage support scheme would fail to incentivise employers to keep workers in their jobs.

She told Radio 4’s Today programme that “unemployment levels are rising very substantially, they’re going back towards 1980s levels.”

The Resolution Foundation think tank also warned that the “winter economic package” would not help turn the tide on unemployment.

Chief executive Torsten Bell said: “Design flaws mean that the new [scheme] will not live up to its promise to significantly reduce the rise in unemployment.”

He added: “Those mistakes could be addressed by scrapping the poorly targeted £7.5 billion job retention bonus, and using those funds to ensure the new support scheme gives firms the right incentives to cut hours rather than jobs.”

Treasury officials are reported to be working on a more longer term support scheme for unemployed people, which is expected to be announced by March.

It comes amid new regional lockdowns after the number of coronavirus cases across England jumped 60 per cent in one week, according to the Office for National Statistics infection survey.

Cardiff and Swansea are preparing to go into local lockdown from 6pm on Sunday.

Leeds was expected to be made an “area of intervention” and likely to face new restrictions from midnight last night, while London was expected to be placed on the watchlist as an “area of concern.”

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