Sunak defends furlough scheme at Covid inquiry despite job losses

Rishi Sunak told the UK Covid inquiry that the furlough scheme could not save every job but helped prevent mass unemployment during the pandemic. The former Chancellor defended the government's economic response on 27 June, arguing it proved stronger than many had expected when the crisis began.

Speaking to the inquiry, Sunak acknowledged the scheme was "not perfect" but maintained it delivered crucial support when businesses across Scotland and the UK faced unprecedented closures. The comments form part of ongoing testimony examining the government's handling of the pandemic's economic fallout.

Defence of emergency measures

Sunak argued the scale of government intervention exceeded initial expectations when Covid-19 first struck in March 2020. He pointed to the furlough scheme's role in maintaining employment relationships during lockdown periods, when many Scottish businesses were forced to close or operate under severe restrictions.

The former Chancellor emphasised that whilst the scheme could not prevent all job losses, it provided a buffer against what could have been far more severe unemployment. He suggested the economic support package represented an appropriate response given the unprecedented nature of the crisis, noting that the government had to act swiftly without full knowledge of how long restrictions would last.

Sunak told the inquiry that early economic modelling suggested unemployment could have reached levels not seen since the 1930s without intervention. He argued that maintaining the link between employers and employees through furlough payments proved crucial in enabling rapid economic recovery once restrictions lifted.

Scottish impact and sector-specific challenges

The furlough scheme supported hundreds of thousands of Scottish workers during successive lockdowns, with particular impact in hospitality, retail and tourism sectors that form significant parts of Scotland's economy. Many Scottish businesses credit the scheme with helping them retain staff during periods when revenue dropped to near zero.

However, the scheme's limitations remain a point of contention in Scottish political discourse. Critics argue certain sectors and worker categories received insufficient support, whilst others question whether the scheme's design adequately reflected Scotland's economic structure and needs. The Scottish hospitality sector, heavily dependent on tourism, faced extended closure periods that stretched the scheme's capacity.

Trade unions have highlighted cases where workers fell through gaps in the support system, particularly those on zero-hours contracts or in newly established businesses. The Scottish Trades Union Congress previously argued that the scheme's eligibility criteria disadvantaged precarious workers who were already vulnerable before the pandemic struck.

Political memory and devolution debates

Sunak's testimony comes as political parties continue to debate the lessons from pandemic economic policy. The Scottish Government has previously called for greater devolution of economic powers, citing the pandemic response as evidence that Scotland needs more control over employment support measures.

First Minister Humza Yousaf has repeatedly argued that Scotland's economic recovery could have been faster with tailored support schemes designed specifically for Scottish industries. The SNP maintains that Westminster's one-size-fits-all approach failed to account for Scotland's distinct economic profile, particularly its reliance on energy, tourism and whisky exports.

The inquiry's examination of economic policy decisions carries particular weight in Scotland, where questions about fiscal autonomy and the effectiveness of UK-wide schemes remain prominent in political debate. Scottish Conservative politicians have defended the UK government's approach, arguing that only the Treasury's borrowing capacity could have funded such extensive support.

Inquiry findings and future policy

The Covid inquiry continues to examine decision-making processes during the pandemic, with particular focus on whether economic support measures adequately protected workers and businesses. Sunak's testimony adds to a growing body of evidence about how emergency policies were developed and implemented under extreme time pressure.

Inquiry chair Baroness Hallett is expected to publish recommendations on economic preparedness for future emergencies. These findings may influence how governments design support schemes for potential future crises, including questions about regional variation and sector-specific measures.

According to the BBC's coverage of the inquiry, Sunak's defence of the furlough scheme forms part of broader testimony about the government's pandemic response, including decisions about business closures and support targeting.

Ongoing scrutiny and next steps

Further sessions are expected to explore the scheme's design, targeting and effectiveness across different regions and sectors. The inquiry will examine whether alternative approaches could have better protected employment whilst minimising economic disruption.

Treasury officials are scheduled to provide additional testimony about the scheme's implementation challenges and the trade-offs involved in rapid policy deployment. The inquiry's final report, expected in 2024, will assess whether the economic response matched the scale of the crisis and provide guidance for future emergency planning.