Coronavirus: Chancellor expected to extend furlough scheme to September, but cut it to 60% of earnings

The chancellor is expected to extend the government’s furlough scheme – currently paying 6.5 million laid off workers 80% of their earnings – from June to September.

But Rishi Sunak is expected to cut the payments to 60% of earnings, although he will pledge to continue to top up the wage packets of laid off staff if they return to work part-time.

The move, which the chancellor insists will avoid the “cliff-edge” cut-off of the scheme feared by Tory MPs and business leaders, is aimed at preventing an estimated 1.2 million redundancies.

The Treasury believes firms such as retailers are unlikely to need all of their staff when they first reopen, because social distancing rules mean shops will have to be less crowded.

A part-time furloughing scheme, therefore, could allow companies to bring back more staff on a rota and prevent steep cuts, ministers believe.

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Signalling Mr Sunak’s announcement, Boris Johnson told MPs: “I have no desire to steal his thunder.

“I think that the furloughing scheme has been one of the most remarkable features of the government’s response.

“It is unlike anything seen internationally, with 6.5 million people currently being supported. It is absolutely right that we should do it.

“One of the most salient and important features of this country’s response to this crisis so far is that we have looked after some of the lowest-paid people in our society – the hardest-working people – and we will continue to do so.”

Mr Sunak, who is likely to announce the changes at the daily Downing Street coronavirus news conference, is expected to lower the £2,500 cap on monthly payments as well as reducing the wage subsidy.

It is thought he will announce that self-employed workers with trading profits of more than £30,000 could be barred from claiming government grants. At present the threshold is £50,000.

Welcoming the changes, Dame Carolyn Fairbairn, director general of the Confederation of British Industry, told The Daily Telegraph: “We would like to see it extended through to the end of September.

“Particularly as we are seeing the very cautious approach to reopening the economy, the last thing we want is unnecessary redundancies.”

The Government is also issuing advice to employers on how to get staff back to work safely and give them confidence to return and guidelines on making it safe to travel to work on public transport.

The Business Secretary Alok Sharma and the Transport Secretary Grant Shapps will make Commons statements, following an Urgent Question on the government’s economic response to COVID-19 from the Shadow Chancellor Anneliese Dodds, to be answered by the Treasury Chief Secretary Steve Barclay.

Trade union leaders and the Labour Party are demanding more protection for workers before they return to work, however.

Unite general secretary Len McCluskey said: “Our message to our members is that if they feel that their workplace isn’t safe then they shouldn’t go to work.”

Rail unions also warned they could disrupt transport services if there is a significant rise in passenger numbers. Manuel Cortes, general secretary of the Transport Salaried Staffs’ Association, said: “All bets are off if overcrowding becomes an issue.” He accused Mr Johnson of having “thrown public transport into chaos and panic”.

And Shadow Employment Rights Minister Andy McDonald told Sky News: “When you look at the detail it all becomes vague and imprecise and weak.

“There are no new obligations on behalf of employers and it really isn’t robust measures there that we should be seeing.

“The language is very, very vague. It says what people could do rather than what they should do. There are some positives but sadly it is all too weak.”

(c) Sky News 2020: Coronavirus: Chancellor expected to extend furlough scheme to September, but cut it to 60% of earnings