The Treasury has announced today that:
Chancellor extends furlough scheme to end of June
Coronavirus Job Retention Scheme extended by one month to reflect continuing social distancing measures.
Following on from yesterday's announcement to keep the social distancing measures in place, Rishi Sunak said the Coronavirus Job Retention Scheme (CJRS) would now be open until the end of June — providing businesses with the certainty they need.
The scheme, which allows firms to furlough employees with the government paying cash grants of 80% of their wages up to a maximum of £2,500, was originally open for three months and backdated from the 1 March to the end of May.
I have not the slightest doubt that this was for the reason I need earlier this week.
We now have another month before the critical time for decision making on redundancies arrives.
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Good job Rishi Sunak reads your blog!!
@CLIVE PARRY
If he does, he’s a bit slow on the uptake!
But people are being made redundant even now.
Are we going to be seeing increased subsidies for councils soon, conjured from the Ways & Means account? When we do, are we not supposed to wonder why this couldn’t have happened as a matter of course during all the years of austerity?
There will be a lot of questions requiring answers soon…
There’s no “wondering” about it:-
https://www.nakedcapitalism.com/2020/04/the-use-and-abuse-of-mmt.html
Now a blog, with many thanks….
Fiver says a July and August extension.
I don’t bet
But I strongly suspect that you are right
There is a further crisis due to explode onto the scene in a few months time. It is/will be the culmination of the Tory/NL folly of marketising our higher education sector. To explain, one must go back to 2012 and the tuition fee increase:
When the Tories/LibDems, following on from NL initial moves towards a market for education, increased tuition fees by nearly 300%, this was done in conjunction with a removal of state support previously given directly to higher education providers (HEPs).
The reasons for this move were likely many, but one of the main ones, from the point of view of then chancellor Osborne was simple, by removing a stipend and replacing it with loans, he was able to write down (on paper) billions of £ of state spending. This simple accounting trick, turning costs into liabilities, allowed him claim a reduction in overall spending, thereby justifying a massive tax reduction/give away to the wealthy and corporations.
At the time of the change, the legislation which allowed fees to rise from an annual £3465 to £9000 at the stroke of a pen, also did a number of other things. Firstly it lifted the cap on the overall number of HE students, providing an opportunity for HEPs to increase their income(needed to by consent/remove opposition from HEPs to the change), and secondly, it came with built in annual increases. This last detail is key to understand the situation HEPs find themselves in now.
Following on from 2012, several things happened within HEPs. As they were now funded entirely by student loans, for the most part, and given that the cap on student numbers had been lifted, most HEPs across the country raced to massively increase pay rates for their CEO equivalents, and went on debt fueled construction sprees to modernise/beautify their campuses, adding thousands of student residences (those ugly flat-pack high rises that have spouted like mushrooms anywhere there is a university). The funding for this construction boom was in the main debt, and it was predicated on the annual tuition fee increase to make it affordable.
Unfortunately for the HEPs (fortunately for students) the annual increase died somewhere along the way in the following years. There has been one increase since, from £9K p/a to £9250, which happened in 2016, but it has not been enough to keep up with the costs of the debt taken out to fund the spending, which has left many HEPs already teetering on the edge financially. Thankfully, however, given the removal of the cap on overall numbers, and given the increased capacity, HEPs were for the most part able to substitute the expected increase in income from another avenue: overseas students. These pay typically 2-4 times as much per annum as UK/EU students, so increasing their numbers has filled a gaping hole in many HEPs budgets. These students come from all over the world, the UKs ranks highly in HE standards internationally, but easily the biggest single cohort come from China.
This is where the current situation matters. Given the UKs haphazard handling of the COVID crisis, particularly when compared to their native China, and seeing as a vaccine is still anywhere from 6-18 months away, meaning a second or third COVID wave may be likely, how many prospective Chinese students will be preparing to pack their bags and move to the far side of the planet in the current climate? Most, I imagine will be heeding their parents concerns, particularly in view of how transport and movement can be so easily disrupted, and choosing to remain closer to home.
If this alone were not bad enough, the fact that this crisis is occurring in the same year as a likely hard Brexit (seeing as BoJo insists there will not be any extension to the negotiations) means the impact on HEPs finances will be felt like a heavyweight one-two punch. This is because, while they don’t account for the same percentage of income per head, EU students make up a large and significant amount of the overall student numbers necessary to fill the HEPs coffers. There will by all accounts be a massive reduction in new EU student numbers this 2020/21 cohort given the uncertainties remaining around Brexit.
I fully expect to see a number of HEPs enter administration before the end of 2020. More still will be effectively bankrupt before the 2020/21 academic year is finished. This is entirely predictable and should be clearly visible to government, but I doubt any action will be taken until it is effectively too late. Most likely when the eventual crisis explodes fully onto the scene we will see additional government bail outs of the sector, coupled with market consolidations, mergers and take overs, etc, further entrenching the current market-based education system.
May I post this as a blog?
I would add a comment
I think the situation worse than you suggest…that’s the only point of difference I have with you
[…] I noted yesterday, the government’s furlough scheme has been extended from 31 May to 30 June. The logic for doing so was very simple. If it had not been millions of people would have started […]
Feel free. I’m inclined to agree with you, Richard. The financial loss that the failures of many former Poly-techs (I strongly believe it will be HEPs from this category that will be among the first to go under) will represent, particularly to many towns and smaller cities in the UK will be intensely felt. In many places, the universities are one of the few main employers left, and the in-flow of millions of £s a year in tuition and maintenance loan monies are among the main drivers of many towns and cities’ local economies. The potential knock-on effects are huge.
Done, and thanks
[…] A commentator simply using the name Robin posted the comment I reproduce below on the blog yesterday. […]