Budget 2021: Susanna quizzes Rishi Sunak on furlough extension
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The furlough scheme has effectively protected millions of jobs which may have otherwise been lost when restrictions were first brought into force in the UK. In March 2020, many businesses were forced to close their doors temporarily, in some cases putting employment at risk. But the Government stepped in to provide 80 percent of salaries up to £2,500 per month to help Britons throughout the COVID-19 crisis.
While the scheme was extended, it is now scheduled to draw to a close in September 2021.
However, this will not be before it undergoes a series of changes which shifts pay patterns for employees.
From today, the Government is reducing its level of pay to 70 percent of furloughed workers’ salaries.
This means employers will be required to step in to meet 10 percent of the salaries, alongside National Insurance and pension contributions.
What is important to note, however is that the monthly limit of £2,500 is set to stay in place.
This means Britons working for organisations where they are furloughed will not feel any pay difference.
However, with employers taking on more financial responsibility, this could act as a way of pushing companies into bringing back their employees full time.
Some fear, though, it could actually have the opposite effect and cause struggling businesses to make certain staff redundant.
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This could be further exacerbated by the future changes which are to come when thinking about how the furlough scheme will end.
The Government has confirmed that in August and September it will once again drop the level of support it will provide through furlough.
A new offering of 60 percent will be put forward, meaning employers will need to pay 20 percent of their furloughed staff’s pay.
The economy is continuing to open up, and restrictions should be lifted by the newly set ‘Freedom Day’ of July 19.
It is hoped many, if not all, businesses will be able to fully reopen and bring their staff back from furlough.
Nonetheless, the scheme is set to continue until September 30 for those who still need this form of support.
But there are currently no plans for any other form of support measures after this date, meaning Britons and their employers may need to think ahead about their future plans.
The Chancellor Rishi Sunak first announced the changes to the furlough scheme within his 2021 Budget which laid out economic plans for the forthcoming year.
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He said: “The furlough scheme will be extended until the end of September.
“For employees, there will be no change to the terms and they will continue to receive 80 percent of their salary for hours not worked until the scheme ends.
“We will ask businesses to contribute alongside the taxpayer to the cost of paying their employees.
“Nothing will change until July when we will ask for a small contribution.
“The Government is proud of furlough, one of the most generous schemes in the world, effectively protecting millions of peoples jobs and incomes.”
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