Furlough shaming must stop, says finance expert Martin Lewis

Furlough shaming is a thing, on top of numerous other problems faced by furloughed workers, whether they're home owners or renters

furlough
(Image credit: Getty)

Furlough shaming must stop, finance expert Martin Lewis has said in an impassioned speech on BBC 5. Lewis was addressing a growing number of comments on social media that brand furloughed workers as lazy or behaving as if they are on holiday.

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In his speech, Lewis reminds listeners that it is the employer who decides to furlough a worker, and the worker is then not allowed to work, so spending time in the park while on furlough is hardly 'flouting' the furlough rules.

This is a much-needed defence of a by now very large group of people – an estimated nine million as of June 2020 – who are finding themselves struggling with getting mortgages, paying rent, and making personal loan repayments.

The biggest problem faced by home owners on furlough has been their suddenly reduced options for moving up, making moving homes impossible for many. The furlough scheme only covers 80 per cent of salaries of up to £2,500 a month, which means that some people's incomes will have been slashed by much more than 20 per cent. This in turn has made them temporarily ineligible for mortgages on larger family homes they would've hoped to secure.

Renters don't have it any easier, with a recent survey of renters painting a shocking picture of a lack of compassion shown by the vast majority of landlords. Only seven per cent of respondents reported that their landlord agreed to a rent reduction due to coronavirus. Only one in four landlords (25 per cent) offered a rent deferral, to be repaid at a later date; but 56 per cent of landlords have offered to flexibility whatsoever, demanding full rent.

This means that even though the tenant eviction ban has just been extended until August, because no new tenant protections have been written into law, many will find themselves evicted after August if they're still furloughed or made redundant. The government have merely asked landlords to be reasonable and try and find a solution, with eviction cases not currently being heard in court. This doesn't really give furloughed renters any real protection, only a delay.

In one particularly disturbing case, an estate agent found himself served with an eviction notice after being furloughed and asking his landlord to negotiate a different payment plan.

The plight of renters demonstrates that being furloughed has put many people in limbo, with potentially severe financial problems cropping up after the scheme ends. Deferrals of payments, whether it's rent, mortgage, or credit card repayments, can create more problems than they solve. Some form of longer-term support for those whose jobs have been affected by Covid-19 is clearly needed.

The government furlough scheme is in the process of being wound down, with employers expected to start contributing towards furloughed worker's salaries from August, when they'll be asked to start paying employer national insurance and pension contributions. 

And from September, employers will need to contribute 20 per cent of their furloughed workers' pay, with the remaining 60 per cent covered by the scheme, which will then end in October.

While these contributions are still relatively low and should enable employers to retain their furloughed workers at least into late October, the changes do make large numbers of UK workers vulnerable to being sacked by employers whose profit margins are so tight that even 10 per cent of their workers' pay will not be feasible.