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Chancellor extends furlough scheme to October

Posted 12 May 2020 · Add Comment

The UK Government’s Coronavirus Job Retention Scheme (CJRS) will remain open until the end of October, the Chancellor announced today, with employers paying a percentage of the salaries of their furloughed staff.

Above: Chancellor of the Exchequer, Rishi Sunak.
Courtesy HM Treasury


In a boost to millions of jobs and businesses, Rishi Sunak said the furlough scheme would be extended by a further four months with workers continuing to receive 80% of their current salary.

From the start of August, furloughed workers will be able to return to work part-time with employers being asked to pay a percentage towards the salaries of their furloughed staff.

The employer payments will substitute the contribution the government is currently making, ensuring that staff continue to receive 80% of their salary, up to £2,500 a month.

Chancellor Rishi Sunak said: "Our Coronavirus Job Retention Scheme has protected millions of jobs and businesses across the UK during the outbreak – and I’ve been clear that I want to avoid a cliff edge and get people back to work in a measured way.

"This extension and the changes we are making to the scheme will give flexibility to businesses while protecting the livelihoods of the British people and our future economic prospects."

New statistics published today revealed the job retention scheme has protected 7.5 million workers and almost 1 million businesses.

The scheme will continue in its current form until the end of July and the changes to allow more flexibility will come in from the start of August. More specific details and information around its implementation will be made available by the end of this month.

The Government will explore ways through which furloughed workers who wish to do additional training or learn new skills are supported during this period. It will also continue to work closely with the Devolved Administrations to ensure the scheme supports people across the Union.

The Chancellor’s decision to extend the scheme, which will continue to apply across all regions and sectors in the UK economy, comes after the government outlined its plan for the next phase of its response to the coronavirus outbreak.

The scheme is just one part of the Government’s world-leading economic response to coronavirus, including an unprecedented package for the self-employed, loans and guarantees that have so far provided billions of pounds in support, tax deferrals and grants for small businesses.

Today the Government is also publishing new statistics that show businesses have benefitted from over £14 billion in loans and guarantees to support their cashflow during the crisis. This includes 268,000 Bounce Back Loans worth £8.3 billion, 36,000 loans worth over £6 billion through the Coronavirus Business Interruption Loan Scheme, and £359 million through the Coronavirus Large Business Interruption Loan Scheme.

Mike Cherry, National Chairman of the Federation of Small Businesses, said: "The Job Retention Scheme is a lifeline which has been hugely beneficial in helping small employers keep their staff in work, and it’s extension is welcome. Small employers have told us that part-time furloughing will help them recover from this crisis and it is welcome that new flexibility is announced today.

BCC Director General Adam Marshall said: "The extension of the Job Retention Scheme will come as a huge help and a huge relief for businesses across the UK.

"The Chancellor is once again listening to what we’ve been saying, and the changes planned will help businesses bring their people back to work through the introduction of a part-time furlough scheme. We will engage with the Treasury and HMRC on the detail to ensure that this gives companies the flexibility they need to reopen safely.

"Over the coming months, the Government should continue to listen to business and evolve the scheme in line with what’s happening on the ground. Further support may yet be needed for companies who are unable to operate for an extended period, or those who face reduced capacity or demand due to ongoing restrictions."

Dame Carolyn Fairbairn, CBI Director-General, said: "The Chancellor is confronting a challenging balancing act deftly. As economic activity slowly speeds up, it’s essential that support schemes adapt in parallel.

"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.

"Firms will, of course, want more detail on how they will contribute to the scheme in the future and will work with Government to get this right.

"Above all, the path of the virus is unpredictable and much change still lies ahead. The Government must continue to keep a watchful eye on those industries and employees that remain at risk. All schemes will need to be kept under review to help minimise impacts on people’s livelihoods and keep businesses thriving."

Paul Everitt, Chief Executive, ADS, said: "Today’s announcement from the Chancellor, extending the Job Retention Scheme to October, is a further good step that will protect jobs and give employers vital flexibility to manage operations during a prolonged period of suppressed demand."

Chief Executive of the Airport Operators Association Karen Dee said: “The extension of the Job Retention Scheme and the promised flexibility from August is a major step forward and will be welcomed by all airports.

“However, with open-ended quarantine restrictions planned, aviation is unlikely to be in a position to recover meaningfully before October. This was underlined this morning by Health Secretary Matt Hancock saying that is “likely to be the case” that summer holidays will be cancelled.

“Aviation needs further Government support to get us through this prolonged period of near-zero passengers and revenue. The Chancellor should announce an extension of business rate relief to airports, provide relief from Civil Aviation Authority charges and provide sector-wide liquidity support to reflect that existing scheme will now not be suitable following the quarantine announcement.

“Other countries have already taken dramatic steps to support their aviation industries. The Chancellor should do likewise to ensure his economic support measures are truly world-leading and prevent UK aviation from falling behind our global competitors.”

Tim Alderslade, CEO of Airlines UK, the industry association representing UK-registered carriers, said: “This is a welcome announcement and we are pleased that from August staff will be allowed to come back to work part-time.

"With aviation’s recovery due to be prolonged and uncertain owing to ongoing travel restrictions, including the 14-day quarantine period proposed by the Government, more action is needed to protect our world leading aviation sector. Our focus remains on working with Government on the measures required to allow for an effective re-start and recovery of our industry.”


 

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