Introduction

The government’s Coronavirus Job Retention Scheme (CJRS) – or furlough scheme – closed at the end of September 2021, having run in some form since March 2020. This note reviews the latest official statistics and third-party analyses to consider how the scheme has affected Londoners.

Use of furlough was relatively high in London, particularly towards the end of the scheme

A cumulative total of 11.7m jobs were supported by the CJRS across the UK at some point since inception. Overall, London accounted for around 1.6m or 17% of the jobs on furlough since the scheme was launched, despite comprising only 14% of payrolled employees.

At the UK level, the number of jobs on furlough peaked in May 2020 (regional data is only available from July 2020). After increasing again up to the third lockdown in January 2021, the number of furloughed jobs held by Londoners declined significantly towards the end of the scheme, especially as the economy reopened over the summer (Figure A1).

However, this decline was less pronounced than in other parts of the UK[1]. This meant that when the scheme closed there were still around 231,000 London staff on furlough – equal to 20% of the UK’s furloughed jobs at the end of September 2021, up from 15% in January 2021.

Figure A1:

Furlough take-up remained particularly high in certain local authorities in London at the end of the scheme, including those near airports

The proportion of jobs still on furlough at the end of the scheme varied across the UK. At 6% of eligible jobs, London had the highest take-up rate of any UK region or country. Furlough rates were otherwise in the range of 3% to 4%, with the UK average at 4%.

As Map A1 shows, there was significant variation between local authorities at the end of the scheme. But the highest take-up rates were mainly in London – of the 15 local authorities with take-up rates of 7% and above in September, 13 were in the capital[2].

Map A1: CJRS take-up rate by local authority, end of September 2021

Source: HMRC data on CJRS take-up in September 2021, released in November 2021.

As noted by HMRC, many of these local authorities are near airports. This includes Ealing (8% of eligible jobs on furlough at the end of the scheme), Hounslow (8%), and Hillingdon (7%) near Heathrow Airport, and Newham (8%) and Redbridge (8%) near London City Airport. The high furlough rates in these areas are likely to reflect (in part) the challenges facing travel and tourism-related industries, where activity is yet to return to normal[3].

Most other local authorities with high furlough rates were in north and north-west London. However, this data is based on employee place of residence and some of these jobs will be located in central areas. Hospitality and retail had the highest number of furloughed jobs in London at the scheme’s end, which could also reflect the persistent increase in remote working among office-based workers and reduced levels of commuting.

There is uncertainty around the end of the scheme, but early indicators point to a muted impact on redundancies and unemployment

With a high number of jobs still being furloughed at the end of September, there is some uncertainty around the near-term outlook for London’s labour market.

The Bank of England expects the unemployment rate to pick-up at the end of the year, but for the rise to be relatively small. With the UK unemployment rate now predicted to reach 4.5% in the fourth quarter of 2021, up from 4.3% in the third quarter, it assumes that most employees on furlough at the end of the scheme will return to work.

This assumption is consistent with information released by the Insolvency Service, which does not show a large increase in redundancy notifications recently. It is also in line with national-level survey findings. For example, a recent ONS survey of businesses estimated that 87% of furloughed employees returned to work following the end of the CJRS[4].

There are reasons to think that the impact could be worse in the capital. In addition to high overall furlough use and challenges related to international travel and tourism and changes in working patterns, it is worth noting that:

• London had a relatively high share of employments on full-furlough at the end of the scheme – 66%, compared with a UK-wide average of 56%;
• according to the IFS, Londoners have been more likely to be made redundant during the pandemic and less likely to find new work;
• Emsi online job postings increased by 19% in London between October 2019 and October 2021, compared with a 50% increase in the rest of England.  

Despite these concerns, there was an increase of 30,600 payrolled employees living in London in October compared to September – the largest proportionate increase of any UK region or country and seventh consecutive month of growth. The number of Londoners claiming unemployment-related benefits also continued to fall on the previous month.  

While many workers have lost their jobs during the pandemic – and these latest estimates may not fully reflect post-furlough redundancies[5] – early indicators suggests that the end of the furlough scheme is unlikely to have resulted in a large increase in redundancies or unemployment in the UK or London.

We will continue to monitor the impact over the coming months. Further information and analysis on this topic can also be found on our COVID-19 labour market analysis page.

---

[1] The number of furloughed jobs in London fell by 34% between the end of June 2021 and the end of September 2021, against a UK average fall of 40%.

[2] Outside of London, it also includes Crawley (7%) – near Gatwick Airport – and Slough (8%). Note that for 32,700 furloughed jobs, the location was unknown

[3] Looking at UK-level data for detailed sub-sectors, Passenger air transport and Travel agencies continued to have the highest take-up rates in the UK at the end of September 2021.

[4] The ONS estimated that: 3% of employees still furloughed at the scheme’s end had been made permanently redundant; 6% had returned to work on increased hours; 65% returned to work on the same number of hours; 16% returned to work on reduced hours; 3% voluntarily left their role; and 8% were classified as ‘other’. A seperate Resolution Foundation survey found that 88% of workers on furlough in September were in work in the first half of October.

[5] According to the ONS: ‘It is possible those made redundant at the end of the furlough scheme will be included in the RTI data for a few further months, while they work out their notice period.’