Coronavirus furlough scheme will end in October, Chancellor Rishi Sunak confirms

What the revamped furlough scheme means for your small business

Back in March, Sunak launched the Coronavirus Job Retention Scheme, under which the government covers 80 percent of wages for employees who are unable to work due to coronavirus pandemic, up to 2,500 pounds (about 3,076 USA dollars) a month.

In August, the taxpayer contribution will stay at 80 per cent, with employers asked to pay National Insurance and Employer Pension Contributions, which are about 5 per cent of employment costs.

He said that for the average claim, this represents five percent of the gross employment costs the employer would have incurred had the employee not been furloughed.

Self-employed people whose work has been affected by coronavirus will receive a "second and final" grant in August, the government says.

In October, taxpayers will pay 60 per cent, and employers will contribute 20 per cent.

After eight months, the scheme will close, Mr Sunak said.

"By September, employers will have had the opportunity to make changes to their workplaces and business practices", he explained on Twitter.

The Office for Budget Responsibility, the government's independent economic forecaster, has forecast that the overall bill for the government's jobs subsidy schemes could hit £80bn, pushing the overall cost of fighting the coronavirus outbreak to more than £300bn. They will have to pay workers' wages for hours they are in work, according to the Treasury.

The cost of the two income programmes was now likely to shoot past £100 billion, the Institute for Fiscal Studies, a think tank, said, about as much as for the NHS over the same March-October period. However, with a dark recession looming, that demand could soon drop off leading to reduced auto sales and less of a need to get furloughed staff back to work.

What cash is available to self-employed workers?

Unions are warning once the support ends, companies will start sacking staff as the money dries up.

In August the companies will have to resume pension and social security payments, building up to 10 per cent of wage costs in September and 20 per cent in October, a lesser requirement than reported by media before the announcement. Officials are expected to present revised figures next week.

There had been calls for freelancers to be paid the same as employees who are furloughed, but, this has been rejected.

The chancellor also unveiled a shakeup of the furlough scheme, a parallel scheme now subsidising 8.4 million workers' wages to protect jobs at struggling firms.

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