UK furlough extension to cost much less than spent so far - finance ministry

FILE PHOTO: A person looks at the adverts in the window of a job agency in London, Britain October 13, 2020. REUTERS/Hannah McKay

LONDON (Reuters) - The cost of British finance minister Rishi Sunak’s decision to extend his COVID furlough programme until March should be “quite a bit lower” than the roughly 40 billion pounds spent so far, a Treasury official told lawmakers on Thursday.

Asked about a possible further 40 billion-pound cost, Beth Russell, director-general for tax and welfare at the Treasury, said the number of claims were likely to be lower than earlier in 2020.

“We wouldn’t expect it to be as high as that. Given the restrictions in the spring, and the restrictions that we are now expecting for the next few months, we would expect it to be quite a bit lower than that,” she told parliament’s Public Accounts Committee.

Britain’s Office for Budget Responsibility will publish an official cost estimate on Nov. 25. The finance ministry has been reluctant to give any cost estimate before that.

The Bank of England has said it expects 5.5 million workers to be covered by the programme in November, when England is in a four-week lockdown, up from around 2 million in October.

Based on these figures, Reuters has estimated that the extension is likely to cost at least 15 billion pounds, taking total government spending on COVID support measures this financial year above 200 billion pounds.

Speaking to the same parliamentary committee, Britain’s top tax official Jim Harra said three arrests had been made so far due to suspicions of defrauding the furlough programme, while 27,000 employers had been invited to “reconsider” their claims.

Some 1.2 million employers had claimed from the Job Retention Scheme as of Oct. 18, receiving a total 41.4 billion pounds.

Three arrests had also been made linked to the Eat Out to Help Out programme which subsidised restaurant dining in August, Harra added.

Reporting by David Milliken; Editing by Toby Chopra and Raissa Kasolowsky