Data shows highest levels of furloughed workers live in areas where benefit claimant count is also rising
Eight of the top 10 areas for furloughed workers also have higher than average BAME populations
Mayor has called on Chancellor to extend the CJRS scheme for worst-hit sectors of the economy
The Mayor of London, Sadiq Khan, has today called on the Chancellor to extend the Coronavirus Job Retention Scheme (CJRS) beyond the end of the lockdown – rather than risk a sudden surge in unemployment later in the summer and the subsequent poverty and homelessness this could cause.
Sadiq also called for further devolution of skills funding, and extensive investment in job creation schemes in the long term to ensure marginalised communities are not left behind by the recovery from Covid-19.
Warning of a ‘looming unemployment crisis’ over the coming months, the Mayor has released new analysis from City Hall’s economic team showing the areas in London where the concentration of furloughed workers overlap with those in which there has been a rise in unemployment in recent months.
Data for the CJRS scheme, published by the Government and analysed by the Greater London Authority (GLA), shows 1.07 million workers across London have been furloughed – with a disproportionately high number in areas that have seen the greatest rise in the benefit claimant count. It also shows the number of furloughed workers in the capital is higher than any other region of the UK and accounted for 12 per cent of the national total.
The top five UK constituencies for the number of furloughed workers are all in London: West Ham (29,300), Tottenham (25,400), East Ham (24,000), Feltham & Heston (23,500) and Brent Central (23,300).
In addition, the top ten constituencies for furloughed workers in London all have a claimant count rate above the London average. Office for National Statistics (ONS) claimant count data for May 2020, released last week, shows that within the capital West Ham (+8,905) was the parliamentary constituency that has seen the largest year on year increase, followed by Tottenham (+8,190), and East Ham (+7,600) (1).
Amid the ongoing economic uncertainty as the country as the lockdown restrictions are eased, the Mayor is concerned that as the furlough scheme is tapered, high numbers of currently furloughed workers could be made redundant, leading to spikes in unemployment in already deprived parts of the capital.
The Government’s Job Retention Scheme has now been extended until October, but with increasing contributions required from employers. In those sectors hardest hit by Covid-19 such as retail, culture and hospitality the Mayor has called on the Government to maintain its 80 per cent contributions for the foreseeable future. Many in these sectors simply won’t have the levels of cashflow they need to pay wages, National Insurance and pension contributions for a number of months.
The Mayor of London, Sadiq Khan, said: “The Covid-19 pandemic has already had an enormous impact on the economy and its impact will be long-lasting and far-reaching. It has highlighted many of the inequalities in our economy and society in sharp relief.
“These new figures clearly show that the parts of London where unemployment and deprivation are most prevalent are also the areas with the highest proportion of furloughed workers.
“While many people may be receiving the support they need from Government at the moment, I’m deeply concerned that without ongoing support many Londoners on low wages and from BAME backgrounds will suffer deepening economic hardship as a result widespread redundancies over the next few months.
“Ministers must urgently extend the help on offer to avoid the looming unemployment crisis which will hit the most disadvantaged and BAME Londoners hardest. In the longer term, we will need more devolved skills funding and new job creation schemes to ensure these communities are not left behind by the recovery.”
Mayor of Newham Rokhsana Fiaz, said: “As Mayor of one of the worst affected areas in the country, I welcome the Mayor of London’s call for extra financial support for those in most need.
“Too many Newham residents are in low wage, insecure jobs, and this is another example of the disproportionate impact that Covid-19 is having on our community – 73% of who are from Black, Asian and Ethnic Minorities. We want to tackle the poverty, inequality and injustice – and yes the racial injustice – that affects our residents by building an inclusive economy. The Council is doing its bit, but we need the Government act now and back its promises with funding.”
Earlier this month, ONS data also showed the country’s economy fell by a record 20.4 per cent in the month of April – the first full month of the coronavirus lockdown – suggesting the UK is on course for a historic recession. It also said London had some of the country’s highest Covid-19 mortality rates in March due to high levels of deprivation in some areas (2).
From September 2020, the government will begin to phase out the furlough scheme by decreasing payments by 10% and decreasing the maximum payment by £313. Employers will then be able to claim 70% of employees wages, capped up to £2,187, representing 14% of employment costs.
From October 2020, the government will pay 60% of wages capped up to £1,875, a further decrease of £312. From November 2020 the scheme will be closed.
The Mayor has invested an additional £1 million into extending business support over the coming 12 months to help small businesses through the current crisis and period of recovery. In April, he committed £2.3 million in grant funding to support London’s cultural and creative industries. He also launched Pay it Forward London, in partnership with Crowdfunder, which lets Londoners to buy goods and services from businesses ahead of them reopening as lockdown restrictions are eased.
The Mayor has established an online Covid-19 support hub offering a range of key online resources and our business support programmes have pivoted to deliver specific business support that is available via telephone and through online platforms. This support is helping hundreds of businesses each month and is accessible to all London businesses across inner and outer London.
The London Growth Hub has also established a Covid-19 business support hub as part of its website and is publishing a range of factsheets, checklists and tools as well as providing sign-posting to Government support and sector-specific initiatives.
ENDS
Notes
ONS monthly labour market report, June 2020 (https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/employmentintheuk/june2020)
ONS GDP monthly estimate, UK: April 2020 (https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/april2020#gdp-fell-by-204-in-april-2020)
To view the full set of figures collated by GLA Economics, see: https://data.london.gov.uk/dataset/gla-economics-covid-19-labour-market-analysis
To learn more about the support the Mayor is offering to businesses during the Covid-19 crisis, see www.growthhub.london.