Coronavirus (COVID-19): The “furlough” scheme in Scotland

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HM Revenue and Customs (HMRC) has published Experimental Official Statistics on the Coronavirus Job Retention Scheme (CJRS), also known as the “furlough scheme”, using claims data covering May and June 2020. This blog focuses on the available Scotland level data. At the time of writing, data on age, gender, value of claims and employer size were only published at a UK level and not available at a Scotland level. Please note analysis is based on where employees live rather than where they work.

What is the Coronavirus Job Retention Scheme (CJRS)?

The UK Government announced the CRJS on 20 March 2020. The purpose of the Scheme is to provide grants to employers to ensure that they can retain and continue to pay staff, despite the effects of the COVID-19 pandemic. The Scheme went live on 20 April, although it covered claims going back to 1 March. Under the Job Retention Scheme, the UK Government will provide a grant to employers to cover 80% of a furloughed employee’s ‘reference salary’, up to £2,500 per month.  Employers can only claim for employees who were on a payroll which was notified to HMRC through a real time information (RTI) submission on or before 19 March 2020. Rules and further details on the Scheme are set out in the guidance.

The scheme closed to new entrants from 30 June 2020. After this date, employers have only been able to furlough employees they furloughed for a full three-week period prior to 30 June 2020. As a consequence of the closure of the Scheme to additional employees and the minimum three-week furlough period that applied until the end of June, the final date that an employer could have furloughed an employee for the first time was 10 June 2020. Employers have until 31 July 2020 to make any claims in respect of the period to 30 June 2020.

As of 30 June, there were approximately 9.4 million workers on the Job Retention Scheme across the UK, representing an increase of eight per cent since May. June’s figures represent 31% of eligible employments across the UK and total £26.5 billion in claims across the UK. 

Scottish uptake of furlough still increasing in the month to June

Scotland had 736,500 furloughed employments, as of 30 June. This was approximately 8% of the UK total and an increase of 17% (or 108,300 in absolute terms) since 31 May 2020.  This was marginally below the levels of increase in England (18%) and Wales (20%), and more than Northern Ireland (13%).

Some of the June increase will have been driven by the fact that the final date that an employer could have furloughed an employee for the first time was 10 June 2020. Also, some of the increases were driven by improvements to the data completeness and methodology used since the June release to match all CJRS claims data with other internal HMRC data to compute a complete picture. This has reduced the proportion of cases reported as ‘unknown’ since the previous release and one of the reasons UK level data have increased by eight per cent but nation/region claims have increased more significantly.

The scale of additional employees joining the furlough scheme in June continued to grow, as demonstarted in the chart below, especially as the Scheme went live in April. This will increase uncertainty around Scotland’s employment levels, as the Scheme unwinds in autumn. Looking at the data by local authority area, in absolute terms, Glasgow and Edinburgh saw the largest increases in the month to June and the island local authorities had the smallest increases, as shown in the chart below.

How has the CRJS been used across Scotland?

The average take-up rate of the furlough scheme across Scotland was about 30%. The take-up rate has been calculated using estimates of the eligible population of employments provided by HMRC.

Take-up rates across local authorities were generally in line with the Scottish average, albeit more local authorities in the western half of the country were marginally above the national average. Highland had the highest take-up rate (34%) and the following four areas completed the top five: Perth and Kinross (33%), Glasgow City (32%), South Ayrshire (32%), and Stirling (32%). The island local authorities (Na h-Eileanan Siar 24%, Shetland 25%, Orkney 27%) and Inverclyde (24%) had the lowest take-up rates.

In absolute terms, Glasgow and Edinburgh have the highest volume of furloughed employments. Glasgow has 12% (88,300 workers) of all furloughed workers in Scotland – this is in line with Glasgow’s national population share of 12%. Edinburgh has 9% (69,500 workers) of the Scottish total, marginally below its national population share of 10%.

Data on the CJRS are not available by Scottish Parliamentary Constituency. However, data are available by UK Parliamentary Constituency in Scotland.

  • Glasgow East has the highest take-up rate in Scotland, with a take-up rate of 36% or 15,000 employments furloughed. This was followed by Glasgow South West (35% take-up) and Inverness, Nairn, Badenoch and Strathspey (35% take-up). 
  • The constituency of Na h-Eileanan an Iar had the lowest take-up rate of 23%. Followed by the constituencies of Inverclyde and Edinburgh South, both with take-up rates of 24%.

Sectors that rely upon ‘social spending’ have been hardest hit

The below chart provides a breakdown of CJRS in Scotland by sector. The chart is sorted by sector size. For example, Health is the largest sector in terms of eligible employments in the Scottish economy at 355,600 eligible employments, with 30,600 employments furloughed, representing a furlough uptake of 9% across the sector.

The chart clearly demonstrates the scale of impact on the Accommodation & food and Construction sectors in Scotland, where over 70% of employees have been furloughed. Arts, entertainment, & recreation is also notable for the scale of impact with a take-up rate of 66%. These data show that in particular, those sectors that rely upon ‘social spending’ have been hardest hit given the scale of social restrictions.

Sectors linked to the public sector (education, health, public administration) and finance had the lowest levels of uptake of the CJRS.

How does Scotland compare to the other nations and regions of the UK?

Given what we know about uptake of furlough in Scotland, how does this compare to the other nations and regions of the UK? In the chart below, the blue shaded bars show geographies with a higher proportion of furloughed employments compared to Scotland. And the yellow shaded bars show geographies with a lower proportion of furloughed employments.  So if there is not much difference between Scotland and other areas, the bars will be very small.

At an all economy level, there is little difference in the uptake of furlough across the nations and regions, ranging between 29% to 32%. However, when compared by sector there is some notable variations.

Every nation and region had a lower proportion of Construction employees on furlough compared to Scotland. In Scotland, 72% of eligible employments in Construction have been furloughed. This compares to 59% across the UK as a whole and 57% in England. Northern Ireland had the closest rate to Scotland at 70%.

Across all countries and regions of the UK more than 70% of employments in Accommodation and food services have been furloughed through CJRS. The Scottish rate of 74% was in line with the UK average. Northern Ireland had the highest rate at 78%.

Apart from Northern Ireland, all other nations and regions have a higher proportion of furloughed employments in Education relative to Scotland.

A note about the Self-Employment Income Support Scheme

HMRC has also published data on the Self-Employment Income Support Scheme claims made up to 30 June 2020. In Scotland, 155,000 individuals claimed from the Scheme, representing a take-up rate of 75%. The total value of claims made was £449 million.

A gloomy employment outlook

Last week’s labour market data showed Scotland’s employment rate decreased marginally to 74.1% from 75.1% the previous quarter.  And the unemployment rate increased marginally to 4.3%, although stayed relatively low by historical trends.  However, these numbers are not a true reflection of the current employment circumstances across Scotland given the furlough data detailed above.  Fraser of Allander last week noted that:

“…. it will take less than 20% of those on furlough to lose their jobs for the unemployment rate to more than double – and that is before factoring in what might happen to those who are self-employed and currently receiving government support”.

The furlough scheme will run until the end of October and from 1 July there has been greater flexibility in the Scheme, allowing employers to bring back furloughed employees part-time. The Scheme will be wound back starting from August.

This leaves much uncertainly for many businesses and workers, as many employers over the coming weeks and months will be regularly reassessing the workforce needs of their businesses, especially as many will be operating significantly below their pre-COVID19 capacity. Also given the many warnings to prepare for the possibility of another outbreak later in the year, many of the predictions around employment over the coming months are gloomy to say the least.

Alison O’Connor, Senior Analyst Financial Scrutiny Unit, and Andrew Aiton, Data Visualisation Manager