Speaking on BBC Coronavirus Newscast, Laura Kuenssberg revealed two Cabinet ministers told her they are expecting the coronavirus furlough scheme to be switched off sector by sector. Chancellor Rishi Sunak announced the scheme will be extended until October, on Tuesday. But the BBC political editor warned of major concerns in the Tory Party over the future of the scheme. 

She said: “A couple of Cabinet ministers have said to me this week that they thought the furlough scheme should be switched off sector by sector.

“It was put to me that if we’re encouraging people to go back to work in construction and manufacturing then obviously in order to get people to go back to work you’d have to start making changes to the scheme that way.

“Obviously lots of people are desperately worried and obviously lots of people cannot go to work because their workplaces are closed.

“That is absolutely fair enough. But there is a worry among some Conservatives that in the longer term, including some ministers, if you allow people to be off paid and if you allow businesses to keep being supported like this on life support, actually in the longer term maybe this makes things worse.

“And there are also big questions about what happens to companies who might have already gone under?

“Or companies who simply can’t afford to start putting their hand in their pocket when the Government starts asking them to share the cost?”

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The furlough scheme, currently supporting 7.5 million jobs, will be extended until the end of October, although employers will be expected to pick up a share of the bill from August as the economy reopens.

The human toll of the COVID-19 pandemic was laid bare in official figures which indicated there have been more than 40,000 coronavirus-related deaths in the UK.

The furlough scheme – which pays 80 percent of a worker’s salary up to a £2,500 monthly cap – will remain unchanged until the end of July, a one-month extension.

Economists at the Institute for Fiscal Studies suggested that could cost £10billion, taking the total amount of support provided by the scheme to around £60billion.

Chancellor Rishi Sunak said more than seven million people were furloughed but as lockdown restrictions eased some could begin returning to work on reduced hours, with the state and employers sharing the cost from August to provide the same level of financial support.

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Meanwhile the Telegraph, citing a confidential Treasury assessment, said the UK’s deficit could reach £337billion this year because of the coronavirus crisis, and measures including income tax hikes, a public sector pay freeze and the end of the triple lock on pensions may be required to fund the debt.

The document, drawn up for Chancellor Rishi Sunak, reportedly said that to fill such a gap in the public finances through tax revenue rises would be “very challenging without breaking the tax lock”.

“To raise fiscally significant amounts, we would either have to increase rates/thresholds in one of the broad-based taxes (IT, NICS, VAT, CT) or reform one of the biggest tax reliefs (eg pensions tax),” according to the document.

The Treasury declined to comment on the report.