Chancellor Rishi Sunak has been urged by a cross-party group of MPs to consider a targeted extension of the furlough scheme or risk “mass long-term unemployment”.

While the Treasury Select Committee has said that a blanket retention of the scheme – which is due to come to an end on 31 October - would not be good value for money, it has joined calls for a sector-specific extension for those businesses unable to recover in line with the rest of the economy.

In its second report into the economic impact of the coronavirus, the committee cited the needs of “a large proportion of business in sectors such as hospitality and leisure that are suffering the most from social distancing,” which “may still have a viable long-term future at the end of October”.

Both Sunak and the prime minister Boris Johnson have previously ruled out an extension, but the committee’s chairman, Mel Stride, has urged them to reconsider on the basis that some sectors will be unable to survive the crisis without specific ongoing support.

“The key will be assisting those businesses who, with additional support, can come through the crisis as sustainable enterprises, rather than focusing on those that will unfortunately just not be viable in the changed post-crisis economy,” she said.

“This requires a very difficult set of judgments. It is where careful analysis and creative thinking will be critical. As the committee has said throughout the crisis, the chancellor must continue to show flexibility in his approach.”

The committee also recommended further efforts to stimulate consumer spending and has urged the chancellor to set out a roadmap for repairing the damaged public finances post-crisis.

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