Furlough extension & self employed grants blasted as leaving 1million out and giving others cash they DON’T need

FURLOUGH extension and huge self employed grants will leave one million Brits out of the scheme and give cash to others who haven't lost any money, experts have warned.

Institute for Fiscal Studies director Paul Johnson has blasted Rishi Sunak's scheme for not targeting those that need it the most.

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The Chancellor extended the scheme, which pays people 80 per cent of their wages up to £2,500 a month, and also gave a massive boost to self employed grants.

It was initially only going to continue through England's national lockdown, set to last until December 2.

People will now be able to claim grants up of to £7,500, calculated on the basis of 80 per cent of their trading profits - up from 40 per cent.

But Mr Johnson said the self-employed scheme saw huge numbers of people being "over-compensated" for the scheme.

The think tank boss told Times Radio: "Essentially a lot of people who saw no reduction in their income (were) getting big cheques from the government."

But more than a million people who could have lost all of their income weren't eligible, Mr Johnson said.

He said: "The scheme hasn't been changed at all in response to those criticisms so we're going to continue to over-compensate some and simply leave a very large number with no compensation at all."

Speaking on Radio 4, Mr Johnson said the scheme was "wasteful on the one hand and badly targeted on another."

He warned even in October - the month the scheme was set to end - there were still 2 million people on furlough.

The Bank of England has forecast this will skyrocket to 5.5.million.

And Mr Johnson said many of these people will be furlough until March and laid off when the scheme comes to an end.

Mr Sunak said the scheme would be reviewed in January, hinting Government contributions could shrink, but he warned Britain was facing a bleak winter.

He justified extending the scheme, saying the economic affects of lockdown reach far beyond the actual time the country is forced to shut up shop.

Mr Sunak told MPs yesterday: "Given this significant uncertainty, a worsening economic backdrop, and the need to give people and businesses security through the winter, I believe it is right to go further."

He added: "Given these changed public health restrictions and the economic trauma they would cause in job losses and business closures I felt it best to extend the furlough scheme, rather than transition at that precise moment to the new Job Support Scheme."

Responding to the criticism of the scheme, business minister Nadhim Zahawi said: "Obviously different economists will look at this with a critical eye.

"The help for the self employed has obviously risen from the claim of forty per cent to eighty percent of profits, average profits.

"The aim of what we're doing is to help as many people, one; remain in jobs hence why the furlough scheme has been extended until the end of March but also help as many people as possible and have a welfare safety net that can help those who can't access the schemes."