Furlough pay: Will the furlough scheme be extended?

Furlough was a relatively unused work until the coronavirus pandemic hit the UK ravaging the economy. Now furlough pay is a lifeline for businesses across the country as they struggle financially. But the Chancellor of the Exchequer is facing calls to extend the scheme, but will it be extended?

The Chancellor Rishi Sunak is under increasing pressure to extend the Government’s Coronavirus Job Retention Scheme.

The scheme sees the Government pay 80 percent of an employees wage in order to prevent workers from being laid off.

Employers can claim a grant for this amount, up to £2,500 a month after deductions for each of their workers.

Employers can claim for furloughed employees that were employed and on their PAYE payroll on or before March 19, 2020.


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Industry and manufacturing think tanks have warned the Chancellor millions could lose their jobs within weeks of the furlough scheme ending if the Government fails to provide employers with additional support.

These think tanks have warned up to 35 percent of jobs could be lost if payments are now extended.

Currently, the furlough scheme is due to end in June.

In total, the scheme has been taken up by around 140,000 businesses, paying the wages of an estimated nine million workers.

Overall, the scheme will currently cost the UK taxpayer around £42 billion for the first three months of the scheme according to the Office of Budgetary Responsibility (OBR).

Prime Minister Boris Johnson is expected to set out a plan for easing lockdown restrictions this week.

Part of the scaling back of lockdown measures will include how and when workers can return to their jobs safely in a bid to kickstart the economy without risking a second peak of the viral crisis.

The Royal Society for Encouragement of Arts, Manufacturing and Commerce warned that without further support, unemployment could skyrocket to levels not seen since the time of the Great Depression.

The head of the RSA Future Work Centre, Alan Lockey, said: “There is an estimated 27 per cent of the entire workforce on furlough, with more than 80 per cent of workers in the hospitality sector affected.

“If those people were made redundant the level of unemployment would rocket to levels not seen since the Great Depression.”

He added: “The Government’s response so far has been robust but it must avoid going back to ‘business as usual’ – including Universal Credit, sanctions and means-testing – if it’s to avoid the devastating impact of prolonged unemployment on whole swathes of the population.”

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Human resource industry body the Chartered Institute of Personnel and Development (CIPD) has echoed these concerns.

CIPD chief executive Peter Cheese said: “Urgent decisions must now be taken to make it more flexible and to extend it so employers can continue to protect jobs.

“Letting furloughed staff work some hours, where possible, will enable organisations to bring back workers from furlough gradually while rebuilding their business.

“This will be vital as lockdown measures are eased over a number of weeks or months, and will reduce the risk of large-scale redundancies in this next phase of the crisis. 

“The Government must also consider extending the scheme to at least the end of September.

“This will provide more certainty for employers and ensure that there is no ‘cliff edge’ exit from furlough straight to redundancy for hundreds of thousands of workers at the end of June.”

Shadow Business Secretary Ed Miliband has called on Mr Sunak to ensure businesses are protected from “existential threat”, adding this could cause significant risk to “hundreds of thousands of their workers and the very fabric of our high streets and communities”.

Writing in The Observer, Mr Milliband said: “Essential public health measures must be accompanied by economic help.

“The government must act urgently with a second wave of support, including, where necessary, an extension of the furlough scheme – with greater flexibility to enable part-time working – and it must look again at the gaps in current schemes.”

He added: “The risks of doing too little, too slowly to help businesses are much greater for the long-term health of the economy than the risks of doing too much, too quickly.”

Will the furlough scheme be extended?

Mr Sunak extended the Coronavirus Job Retention Scheme by one month in April to reflect the continuing social distancing measures meaning the scheme is now open until the end of June.

The Chancellor has not yet made any comment about extending the scheme further.

However, Mr Sunak said he would keep the scheme under review and extend if necessary.

He said: “It is vital for people’s livelihoods that the UK economy gets up and running again when it is safe to do so, and I will continue to review the scheme so it is supporting our recovery.”

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