Chancellor Rishi Sunak announced that the UK Furlough Scheme has now been extended by another four months until October. A relief for many people but too late for some.
- Coronavirus Job Retention Scheme will continue until the end of October
- Furloughed workers across the UK will continue to receive 80% of their current salary, up to £2,500
- New flexibility will be introduced from August to get employees back to work and boost the economy
In a boost to millions of jobs and businesses, Rishi Sunak said the furlough scheme would be extended by a further four months with workers continuing to receive 80% of their current salary.
As the Government plans to reopen the economy, they have proposed plans to support people to get back to work. From the start of August, furloughed workers will be able to return to work part-time. With employers being asked to pay a percentage towards the salaries of their furloughed staff.
The employer payments will substitute the contribution the government is currently making, ensuring that staff continue to receive 80% of their salary, up to £2,500 a month.
Chancellor Rishi Sunak said:
Our Coronavirus Job Retention Scheme has protected millions of jobs and businesses across the UK during the outbreak – and I’ve been clear that I want to avoid a cliff edge and get people back to work in a measured way.
This extension and the changes we are making to the scheme will give flexibility to businesses while protecting the livelihoods of the British people and our future economic prospects.
The Furlough Announcement follows the PM’s message that lockdown will be eased across the UK.
How does furloughing work?
The Government introduced the furlough scheme – officially called the Coronavirus Job Retention Scheme (CJRS) – to help employers pay their workers during the lockdown period.
A furloughed job is rested by the business, so the person is unable to work. The Government will pay 80% of the salary, up to £2,500 a month until in theory, the economy starts again and the worker can return to the business.
Key points of furloughing:
The state pays your employer 80% of your salary, up to £2,500/month
The scheme opened to employers on Monday 20 April. Employers could backdate claims to the beginning of March.
You needed to have been on your employer’s payroll on 19 March 2020 to be eligible for furlough.
When the scheme was launched, it applied to those on their employer’s payroll by 28 February 2020. However, the Treasury extended the scheme to include people who were on a company’s payroll on 19 March 2020.
Furloughing is at the discretion of your employer
The Government have offered this as a safety net for most employers and employees. Unfortunately, a company is not required to furlough staff and it is up to their discretion who to furlough.
Job retention scheme has protected 7.5 million workers so far
New statistics published today revealed the job retention scheme has protected 7.5 million workers and almost 1 million businesses.
The scheme will continue in its current form until the end of July. The changes to allow more flexibility will come in from the start of August. More specific details and information around its implementation will be made available by the end of May.
Furloughed workers can learn new skills during this time
Furloughed workers are able to do additional training or learn new skills during this period.
The Chancellor’s decision to extend the scheme in the UK economy
Follows the announcement from the government outlining its plan for the next phase of its response to the coronavirus outbreak.
The scheme is just one part of the government’s world-leading economic response to coronavirus. Loans and guarantees have provided billions of pounds in support, tax deferrals and grants for small businesses.
The government also published new statistics that show businesses have received over £14 billion in loans and guarantees to support their cash flow during the crisis. This includes 268,000 Bounce Back Loans worth £8.3 billion. 36,000 loans worth over £6 billion through the Coronavirus Business Interruption Loan Scheme. As well as £359 million through the Coronavirus Large Business Interruption Loan Scheme.
Mike Cherry, National Chairman of the Federation of Small Businesses, said:
The Job Retention Scheme is a lifeline which has been hugely beneficial in helping small employers keep their staff in work, and it’s extension is welcome. Small employers have told us that part-time furloughing will help them recover from this crisis and it is welcome that new flexibility is announced today.
BCC Director General Adam Marshall said:
The extension of the Job Retention Scheme will come as a huge help and a huge relief for businesses across the UK.
The Chancellor is once again listening to what we’ve been saying, and the changes planned will help businesses bring their people back to work through the introduction of a part-time furlough scheme. We will engage with the Treasury and HMRC on the detail to ensure that this gives companies the flexibility they need to reopen safely.
Over the coming months, the government should continue to listen to business and evolve the scheme in line with what’s happening on the ground. Further support may yet be needed for companies who are unable to operate for an extended period, or those who face reduced capacity or demand due to ongoing restrictions.
Dame Carolyn Fairbairn, CBI Director-General, said:
The Chancellor is confronting a challenging balancing act deftly. As economic activity slowly speeds up, it’s essential that support schemes adapt in parallel.
Extending the furlough to avoid a June cliff-edge continues the significant efforts made already and will protect millions of jobs.
Introducing much needed flexibility is extremely welcome. It will prepare the ground for firms that are reawakening, while helping those who remain in hibernation. That’s essential as the UK economy revives step-by-step, while supporting livelihoods.
Firms will, of course, want more detail on how they will contribute to the scheme in the future and will work with government to get this right.
Above all, the path of the virus is unpredictable, and much change still lies ahead. The government must continue to keep a watchful eye on those industries and employees that remain at risk. All schemes will need to be kept under review to help minimise impacts on people’s livelihoods and keep businesses thriving.
The greater the number of good businesses saved now, the easier it will be for the economy to recover.
Panel Discussion: How to support furloughed team members during the crisis
I will be discussing how to support furloughed team members during the crisis at 12pm, Thursday, 14th May. It’s a distressing time for many people.