Nearly one in four UK employees have been furloughed in the past fortnight under the scheme to support workers and firms during the coronavirus outbreak, according to government data.
HM Revenue and Customs data released on Monday showed 6.3 million workers are having up to 80 per cent of their salaries paid by the Treasury under its job retention scheme.
Some 23 per cent of the country’s workforce has been temporarily laid off, according to the most recent labour market data, which placed the number of private sector workers at 27.5 million.
More than 800,000 firms have furloughed workers, at a cost of £8bn to the public purse, since the scheme was launched on 20 April.
Acknowledging that the current level of expenditure is not “sustainable” in the long-term, Chancellor Rishi Sunak promised in response to the figures that there would be no “cliff-edge” end to the support scheme.
Speaking to ITV News, Mr Sunak said ministers were looking at ways to wind down the scheme – which is currently due to run to the end of June – and ease people back into work in a “measured way”.
“To anyone anxious about this, I want to reassure that there will be no cliff-edge to the furlough scheme,” he said.
“I’m working as we speak to figure out the most effective way to wind down the scheme and ease people back into work in a measured way.
“As some scenarios have suggested, we are potentially spending as much on the furlough scheme as we do on the NHS for example.
“Clearly that is not a sustainable situation which is why, as soon as the time is right, we want to get people back to work and the economy fired up again.”
Last week, the Office for Budget Responsibility estimated the first three months of the government’s furlough scheme to have a cost (net of income tax to HMRC) of £39bn, with a further £10bn for self-employed workers.
The Liberal Democrats have already called for a “tapered” end to the programme, with the Treasury paying 50 per cent of salaries for the first month after people return to work, falling to 30 per cent after the third month, with employers picking up the full bill after the fourth.
“The government furlough scheme has done a good job at helping thousands of businesses through the lockdown, but the shadow of lockdown will be long, and the ‘new normal’ will be extremely challenging,” said acting Lib Dem leader Sir Ed Davey.
“Businesses and their staff need time to plan, and confidence the government will be there, ready to support.”
Torsten Bell, chief executive of the Resolution Foundation think tank which proposed the job retention scheme, said it was a price “very much worth paying”.
“The 6.3 million jobs being furloughed shows in stark terms the scale of the economic shutdown that Britain is living through,” he said.
“If this kind of volume of workers stay on the scheme for several months, the cost will run into the tens of billions of pounds. And that is a cost very much worth paying.
“Even despite mass furloughing, unemployment is still soaring, with over two million new claims for benefits coming though.
“This should remind us how badly needed the retention scheme is, but also that we are likely to be living with the legacy of high unemployment that coronavirus has given Britain, long after it has been phased out.”
The figures came as pensions minister Therese Coffey said the government had received 1.8 million claims for Universal Credit between 16 March and the end of April.
Ms Coffey said that overall, the volume of welfare claims had been six times bigger than pre-coronavirus during that period, and that in one particular week the increase had been tenfold.
Additional reporting by agencies