UK Politics

Govt bracing for four million unemployed as COVID crisis accelerates

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Britain's benefits system is bracing for up to four million unemployed in the coming months as the economic fall-out of the COVID crisis accelerates.

The work and pensions secretary Therese Coffey told Sky News her department was preparing to support that level of unemployed, but said she "genuinely hopes" that we do not reach that figure.

On a visit to promote the new £2bn Kickstarter scheme to get young benefit claimants into work placements, Ms Coffey said that her department has taken the Office of Budget Responsibility's (OBR) forecast and was planning around that scenario.

"I think we're in a number similar in terms of being ready to help people and trying to help them get back to work as quickly as possible," Ms Coffey said.

Image: Therese Coffey says her department is ready for an increase in claimants

"We're bringing people into the organisation and in a COVID safe way in order to respond to the challenge.

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"I genuinely hope we don't reach, obviously, that figure. But it's important we are ready to help people."

The number of people on universal credit soared during the first wave of the pandemic with 2.7 million people claiming by August, a 120.8% increase since March.

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The OBR has forecast joblessness could rise to 13.2% – equivalent to four million people – by next year.

Ms Coffey said her department was ready for an increase in claimants and was "evolving our plans recognising how the economy works".

The department will have hired 25,000 new staff in the year to March 2021 – a third increase – as it gears up to cope with rising unemployment, while also doubling the number of work coaches to help people retrain and find work in sectors not crushed by COVID-19.

"I think it's fair to say the doubling of work coaches is a real investment in making sure we help people, many of whom will never have had benefits and may not have been unemployed or for a very long time," she added.

"That might be putting their chosen career on hold, just for a couple of years while their sector recovers, but helping them get into some of the growth sectors – construction, other infrastructure, health and social care."

Ministers are bracing for a spike in unemployment as the chancellor ends the £39bn furlough scheme and replaces it with a German-style wage subsidy plan.

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Sunak announces 'job support scheme'

Under the new Jobs Support Scheme the taxpayer will no longer pay part of the wages of an estimated 3 million employees who could not work.

The Treasury will instead only subsidise people who are working at least a third of their usual hours – giving employers just weeks to decide which jobs in their businesses remain viable, with employees unable to work any of their normal hours ineligible for government support.

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