Furlough scheme extended for another four months
Chancellor Rishi Sunak has announced that the coronavirus furlough programme will be extended until the end of October.
And he confirmed the Job Retention Scheme (JRS) will keep paying 80 per cent of people’s wages - up to £2,500 per month - as they stay at home during the pandemic until the end of July.
But he hinted the terms of the policy will change from August, with furloughed employees able to return to work part-time, but employers expected to cover more of the cost.
Speaking in the House of Commons, Sunak said the scheme “has been a world-leading economic intervention, supporting livelihoods and protecting futures”.
He said so far 7.5 million jobs have been furloughed from almost one million businesses suffering from the dramatic impact the Covid-19 crisis has had on the UK.
The Chancellor said: “And as we reopen the economy we will need to support people back to work. We will do so in a measured way.
“I can announce today the Job Retention Scheme will be extended for four months until the end of October. By that point we will have provided eight months’ of support to British people and businesses.”
He added: “Until the end of July, there will be no changes whatsoever. Then from August to October the scheme will continue for all sectors and regions of the UK but with great flexibility to support the transition back to work.
“Employers currently using the scheme will be able to bring furloughed employees back part-time.
“And we will ask employers to start sharing with the Government the cost of paying people’s salaries.”
“By that point, we will have provided eight months of support to British people and businesses. Until the end of July, there will be no changes to the scheme whatsoever.”
The Cabinet minister said full details will be announced by the end of May, explaining: “But I want to assure people today of one thing that won’t change: workers will through, the combined efforts of government and employers, continue to receive the same level of overall support as they do now at 80 per cent of their current salary - up to £2500 a month.”
He finished his statement in response to an Urgent Question by Labour by saying: “Our message today is simple.
“We stood behind Britain's workers and businesses, as we came into this crisis. And we will stand behind them as we come through the other side.”
In response shadow chancellor Anneliese Dodds asked about comments attributed to Government officials suggesting people need to be "weaned off an addiction" to the furlough scheme.
She said people do not want to be furloughed, adding: "It's critically important they are not penalised for that choice.
“We welcome the flexibility mentioned, we've asked for this repeatedly."
Sunak replied: "The use of the word 'addiction' is not one I have ever used and not one I agree with. Nobody who is on the furlough scheme wants to be on this scheme.
“People up and down this country believe in the dignity of their work, going to work, providing for their families, it's not their fault their business has been asked to close or asked to stay at home."
The news was cautiously welcomed by the Scottish Government. Cabinet Secretary for Economy, Fair Work and Culture Fiona Hyslop said she was “particularly pleased” that from August there would be more flexibility to the scheme, allowing workers to return part-time.
“However, more clarity is required on the details of today’s announcement,” she said.
“In particular, what employers will be asked to contribute to the costs of the scheme, how any changes will relate to guidance on safer workplaces in each of the four nations, how workers in isolation will be supported and what additional support might be provided to industries, such as tourism and hospitality, facing specific difficulties. I will be raising these issues with the UK Government in the coming days.”
Scottish Trade Union Congress general secretary designate Roz Foyer said the scheme’s extension was “absolutely vital but its detail will be all important and the arrangement needed to reflect the differing guidance across the four nations”.
“If come the start of August, the return to work is slower in Scotland for sound health and safety reasons, we need the scheme to be flexible enough to support that process with no financial detriment to those workers affected,” she said.
Meanwhile, the Scottish Chambers of Commerce (SCC) said it looked forward to seeing the detail around a proposed employers’ contribution, but also welcomed flexibility in the scheme.
“We would ask that this takes into consideration, particularly for SMEs, their ability to pay contributions depending on how quickly their income recovers as lock down eases. Trading conditions will differ depending on location and sector and the flexibility of the furlough scheme must take these factors on board,” SCC chief executive Dr Liz Cameron said.
The British Chambers of Commerce director general Adam Marshall said it will “come as a huge help and a huge relief for businesses across the UK”.
And Dame Carolyn Fairbairn from the CBI said: “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.”
But the chair of the Treasury select committee, Tory MP Mel Stride, said he wanted to see the full details of the planned changes to the scheme.
“The devil though will be in the detail, which will be set out later this month when the Treasury Committee looks forward to carefully scrutinising these changes," he said.
“The Chancellor also said that there will be no changes to the scheme until July.
“This will be worrying for those who continue to fall through the gaps of the Government’s support measures such as the lack of furlough support to help cover dividend income generated through self-employment."