Two million viable jobs will be needlessly lost under the government’s plan to end its flagship jobs support scheme, Boris Johnson is being warned on Sunday, amid cross-party demands for further emergency help. After confirmation that Britain has entered the deepest recession since records began, new analysis seen by the Observer finds that as many as 3 million jobs will still be reliant on the government’s furlough scheme by the time it is closed at the end of October. While 1 million jobs will be lost permanently as a result of the pandemic’s impact and changing demand, it finds that the remainder could be saved in the long run by adopting a successor to the furlough scheme focused on viable jobs in the hospitality, entertainment and construction sectors. The new research, drawn up by the Institute for Public Policy Research thinktank, warns that simply withdrawing the furlough scheme with nothing in its place will cause unemployment at levels “not seen since the Great Depression of the 1930s”. It also calls for major increases in universal credit to help those who are out of a job – an idea that is gaining support among Tory MPs. The public is split on extending the furlough scheme beyond October, but most people want the support extended in some form, according to an Opinium poll for the Observer. It found 28% say the scheme should end as intended, 33% back extending it for sectors most affected by Covid-19, while 18% support extending it for all sectors. Official figures confirmed last week that the UK economy shrank by more than any other major nation during the coronavirus outbreak in the three months to June. GDP fell by 20.4% compared with the previous three months, representing the biggest such decline since comparable records began in 1955. Shadow chancellor Anneliese Dodds warned that simply ending the furlough scheme would “plunge the country even further into a jobs crisis, and this report confirms that”. She added: “We’ve already seen nearly three-quarters of a million jobs lost since March, and now millions more risk being lost if the government doesn’t change course.” Meanwhile, support is growing on the Tory benches for a permanent increase in universal credit to help those out of work. Stephen McPartland, a Tory MP who led a successful rebellion against tax credit cuts in 2015, said: “We have to support those who will be losing their jobs and universal credit needs to change if it is going to provide that support. It is clear what needs to be done, but the political will to find the funds has just not been there.” Pressure is building outside parliament. Gillian Guy, chief executive of Citizens Advice, said: “We’re already supporting one person every two minutes on a redundancy issue. As the furlough scheme ends, that number could snowball. Failure to act now risks long-term social and economic scarring that could take decades to recover from. It’s crucial the government takes further steps to prevent redundancies and strengthen the safety net for people who’ve struggled as a result of this crisis.” Caroline Abrahams, charity director at Age UK, warned that the number of over-50s who were made redundant and then completely fell out of employment was already rising sharply. “We fear that unless the government intervenes to help, unemployment among older shielded workers is set to soar,” she said. The IPPR report calls for the furlough scheme to be replaced by a new programme focused on provably sustainable jobs and encouraging employers to take back staff part time, rather than lay them off. It urges the government to pay 10% of the wages of employees brought back part time for the hours they work, plus 60% of wages for the hours they do not work, and to ensure that no worker’s total income falls below the minimum wage, with a £2,500 per month cap. Anyone shielding should be able to use the scheme without conditions. Clare McNeil, IPPR’s associate director, said: “The chancellor has said he will never accept unemployment as an unavoidable outcome. But by ending the job retention scheme too early, and with no plan for protecting jobs in local lockdowns or a second wave, that is precisely what is happening.”