Covid: February redundancy plans fall despite lockdown

British firms planned fewer job cuts last month despite many being forced to close by Covid lockdowns.

About 26,600 jobs were put at risk, one-fifth below January's figure and slightly lower than February 2020.

The numbers suggest that government support schemes have helped prevent the mass redundancies seen in the first lockdown.

The figures from the Insolvency Service were obtained by a BBC Freedom of Information request.

Employers planning 20 or more redundancies have to notify the government via the Insolvency Service by filing a form called HR1.

Because these filings happen at the start of the redundancy process, they give an early indication of labour market changes months before they show up in unemployment figures published by the Office for National Statistics (ONS).

The numbers vary considerably from month to month, so it is hard to draw conclusions from small changes.

But there is no sign of a significant spike in job cuts as seen last summer, when businesses were first counting the cost of large parts of the economy being forced to shut.

Government support schemes, such as the furlough scheme where the government contributes to workers' wages at struggling firms, have helped to keep redundancy and unemployment figures down.

At least 4.7 million workers were on furlough at the end of February, according to provisional figures from HMRC.

In March, the chancellor announced that furlough would be extended until the end of September. But experts fear that unemployment and business failures will increase again as government support is withdrawn.

"A lot of those firms are not going to be able to afford to pay the full wages after 30 September," says Dr Nicola Headlam of Red Flag Alert, a company that monitors the financial health of companies.

"Without furlough, a lot of those jobs are gone. There is going to be a lot of shakeout."

The number of firms filing redundancy notifications is broadly unchanged in February at 340. This figure also shows a big decline from the extraordinary levels seen last summer.

Employers only notify government about proposed redundancies, and they often make fewer job cuts than they initially plan.

But because the notifications are only necessary for employers planning 20 or more job cuts, the overall number of redundancies measured by the ONS usually turns out to be higher than HR1 total.

Firms in Northern Ireland file their HR1 forms with the Northern Ireland Statistics and Research Agency and they are not included in these figures.

Posted on Mar 26, 2021.

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