Furlough scheme will not be extended despite delay to unlocking
The Coronavirus Jobs Retention Scheme is due to run until the end of September but will start to be wound down from 1 July – two-and-a-half weeks before the new Freedom Day.
Last night, prime minister Boris Johnson announced coronavirus restrictions will be lifted on 19 July instead of 21 June amid a rise in cases of the Delta variant.
A HM Treasury spokesperson said: “The furlough scheme is in place until September – we deliberately went long with our support to provide certainty to people and businesses over the summer.”
However, following yesterday’s news unions and trade bodies have called for the scheme to be extended to help struggling businesses.
Frances O’Grady, director general of the TUC, said: “Last night’s announcement means many workers and businesses will need more help – especially in the arts and hospitality sectors. Ministers must step up and provide targeted support for these industries. We can’t afford for more companies to go the wall, taking good jobs with them.
“Government must delay asking businesses to make contributions to the furlough scheme in July and extend the scheme as long as needed.”
When the tapering begins in July, employees on furlough will still receive 80% of their wages until the scheme ends – but employers will gradually pay more.
Between now and 30 June, the government will pay 80% of wages for hours not worked, up to £2,500 a month. Employers will be asked to cover national insurance and employer pension contributions.
But in July the government will only pay 70%, with employers expected to pay the remaining 10%, plus national insurance and employer pension contributions.
In August and September the state will pay 60% and employers will have to pay 20%.
Kate Nicholls, chief executive of UK Hospitality, said: “This four-week delay to lifting restrictions will cost the sector around £3bn in sales, put at risk 300,000 jobs and have a knock-on impact on bookings throughout the summer and into the autumn.
“Simply put, if the supports provided by the Chancellor are not sustained and adjusted, businesses will fail and getting this far will count for nought.”
To date, the furlough scheme has supported over 11.5 million jobs at a cost of nearly £65bn.