Rishi Sunak: There are no plans to extend furlough
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The Coronavirus Job Retention Scheme otherwise known as furlough has been a lifeline for millions of Brits throughout the pandemic. The scheme was set up by Chancellor Rishi Sunak last year to ensure Britons continued to have an income by covering the costs of their pay when their employers were forced to close their doors. When will the scheme come to an end?
The original furlough scheme was introduced in spring 2020 to prevent job losses as many couldn’t work due to lockdown restrictions.
Many businesses were forced to close or run at reduced capacity because of pandemic restrictions so they may not have needed their entire workforce.
As pandemic restrictions remained in place longer than anyone anticipated the scheme was extended to offer additional support.
The scheme initially paid 80 percent of the wages of Brits who couldn’t work or whose employers could no longer afford to pay them.
This has a monthly limit of up to £2,500 per person.
In July 2021 Mr Sunak altered the scheme requiring employers to pay 10 percent of their staff’s salaries whilst the Government’s topped up the remaining 70 percent.
The Government’s contribution has fallen by another 10 percent this month to 60 percent whilst employers pay 20 percent, this will continue throughout September.
Workers shouldn’t notice the difference as the monthly limit of £2,500 will remain the same.
It is up to employers to claim their employee’s furlough through the Job Retention Scheme, staff can’t apply for it themselves.
Employees have had to continue paying for employer National Insurance contributions and pension costs.
This gradual drop in government support makes the scheme more expensive for employers – the Government hope this will encourage them to take back full-time workers or to make those redundant who they can no longer afford to keep on.
As the economy reopens and sectors such as the hospitality industry bounce back the Government hopes most furloughed staff will be able to return to work.
When does furlough end?
The scheme will continue until September 30 this year, so from October employers will have to pay their worker’s entire salaries.
The scheme has been extended four times already, but if it is not extended again employers will need to decide if they can take back furloughed staff or if they will have to make them redundant.
Boris Johnson and Chancellor have said they don’t intend to extend furlough again.
Boris Johnson said: “On the basis of what we can see now in the data… we don’t think we’ll need to change”.
But if restrictions are reimposed the Government will come under a lot of pressure to reintroduce the scheme.
Around 3.4 million Britons are currently on furlough.
Throughout the pandemic, the scheme has supported around 11.5 million Brits.
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