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Introduced in March, the scheme has seen the government offer significant financial support to companies impacted by Covid-19 restrictions.

The government paid 80% of furloughed employees’ wages, up to a maximum of £2,500 a month, for the first months of the initiative, while in August employers were required to pay National Insurance and pension costs.

From September, employers paid 10% of wages, with the government paying the other 70%, while in October this alters to a 20%-60% split, ahead of the scheme ending on October 31st.

However, the Committee has warned such an abrupt end to the scheme that has helped save thousands of jobs amid the crisis, at a time when Covid-19 is starting to spread again, could lead to widespread redundancies.

As the Committee has said throughout the crisis, the Chancellor must continue to show flexibility in his approach”

Mel Stride MP, chair of the Committee, says that rather than persisting with the current furlough scheme, the government should design a new system whereby it offers support to businesses most likely to survive the crisis.

“One major challenge is to target assistance effectively at those businesses and individuals who need it,” Stride says, adding: “The Chancellor should carefully consider targeted extensions to the Coronavirus Job Retention Scheme and explain his conclusions.

“The key will be assisting those businesses who, with additional support, can come through the crisis as sustainable enterprises, rather than focusing on those that will unfortunately just not be viable in the changed post-crisis economy.

“This requires a very difficult set of judgements; it is where careful analysis and creative thinking will be critical.

“As the Committee has said throughout the crisis, the Chancellor must continue to show flexibility in his approach.”

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Ministers urge extension to furlough scheme

The Treasury Select Committee has called on Chancellor Rishi Sunak to extend the government’s novel coronavirus (Covid-19) furlough scheme, or risk mass job losses when the initiative ends in October.