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COVID-19: Furlough scheme extended until end of April

Written by on 17/12/2020

The furlough scheme supporting workers temporarily laid off due to the coronavirus crisis will be extended by a month until the end of April.

It will mean the government continues to pay 80% of wages for those workers “giving business and employees across the UK certainty into the new year”, the Treasury said.

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Chancellor Rishi Sunak had been due to review the employer contribution element of the furlough scheme in January but this has now been brought forward.

That means that, unlike earlier this year when the government started to scale back the subsidy and asked companies to put in more to cover wages, they will still have to pay only national insurance and pension contributions.

Mr Sunak also announced that government-backed loan schemes designed to support stricken firms through the coronavirus crisis – which had been due to close at the end of January – would continue until the end of March.

The chancellor said: “Our package of support for businesses and workers continues to be one of the most generous and effective in the world – helping our economy to recover and protecting livelihoods across the country.

“We know the premium businesses place on certainty, so it is right that we enable them to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support.”

Figures published earlier on Thursday showed the government’s spending on the furlough scheme had risen to £46.4bn so far.

Separate data published by the Office for National Statistics (ONS) showed 15.5% of the workforce, or just over five million people, were currently on furlough leave.

The furlough extension was announced as the chancellor also revealed that the UK’s next budget would take place on 3 March, with latest economic forecasts from the Office for Budget Responsibility (OBR) to be published alongside it.

That event will also see the government set out details of further schemes to support business after initiatives such as the Bounce-Back loan scheme and coronavirus business interruption loans have ended.

It means employers will have more than 45 days – the statutory notice period for redundancies – to make plans once they have learned how they might be helped by the latest package of measures.

The Treasury said that so far, the furlough scheme, officially known as the Coronavirus Job Retention Scheme (CJRS) scheme has protected 9.6 million jobs across the UK.

It also said that more than £68bn had been provided to businesses under the government’s loan schemes.

The furlough scheme’s extension into the spring of next year will mean millions of threatened jobs being kept alive for more than a year thanks to government help.

First launched in April – and backdated to 1 March – the furlough scheme initially saw the government cover 80% of wages for businesses that made claims.

It was later gradually scaled back and by October covered just 60% of wages.

A newly-extended scheme from November – as lockdowns, followed by tier restrictions, came into force – covered 80% of wages and it will now continue at this level until the end of April.

Similar levels of help have been on offer to support self-employed workers.

Unemployment has been rising during the pandemic, with latest figures showing the jobless rate climbing to 4.9% in the three months to October and redundancies hitting a record high.

A Sky News tracker of publicly-announced job cut announcements shows hospitality, retail and aviation have been the worst affected parts of the economy.

The Confederation of British Industry (CBI) said the extension of the furlough scheme would bring “some much-needed certainty and respite” for businesses.

But Labour accused Mr Sunak of waiting until the “last possible minute to act” with businesses potentially preparing to issue redundancy notices.

(c) Sky News 2020: COVID-19: Furlough scheme extended until end of April