Calls for Rishi Sunak to extend furlough scheme in UK Budget

Calls are being made by several quarters of the business community to extend the furlough scheme ahead of the UK Budget being announced this Wednesday.

The Chancellor - pictured delivering the Summer Statement in July - has suggested that the furlough scheme will be extended in Wednesday's Budget. Picture: Wiktor Szymanowicz/Barcroft Media via Getty Images.

The push follows Chancellor Rishi Sunak suggesting that he could extend the initiative – beyond the current end date of April 30.

A new survey has found 71 per cent of leaders of small and medium-sized enterprises (SMEs) are calling for the support scheme, which is available across the UK, to be in place for longer.

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The report from flexible funding specialist Nucleus Commercial Finance also found larger businesses with between 50 and 249 employees reported feeling the pressure the most, with 83 per cent calling for an extension.

It sits against a backdrop of company bosses under strain, with one in seven expected to make redundancies once furlough ends, and such bosses report feeling both stressed (43 per cent) and anxious (42 per cent).

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Chirag Shah, chief executive of Nucleus Commercial Finance, deemed the furlough scheme a “lifeline” to SMEs in a period of heightened uncertainty.

The initiative, officially known as the Coronavirus Job Retention Scheme (CJRS), has paid 80 per cent of some employees' salary up to £2,500 a month for hours not worked throughout the coronavirus crisis – and it has already been extended three times.

In Scotland, there were around 930,000 people on furlough during the first peak of the virus in the spring and summer of last year.

Nucleus Commercial Finance – an accredited provider of the Coronavirus Business Interruption Loan Scheme – said 45 per cent of SMEs currently have staff on furlough.

More than a quarter of SME bosses said the scheme should be extended until the end of July, 16 per cent until the end of October, 11 per cent until the end of the year, and a further 18 per cent believe it should be extended until the UK population has been vaccinated. On a positive note, some 13 per cent plan to grow their workforce this year.


Mr Shah said: “While the scheme cannot go on forever, an abrupt end could leave many SMEs struggling to survive, exacerbating the financial and mental health challenges many business owners are facing.

"As the return to normal is still a long way off for the majority, it’s vital the Chancellor listens to business owners and lays out a clear plan of action, so SMEs can look ahead to the coming months with some degree of certainty.”

Tom Clougherty, head of tax at the Centre for Policy Studies, is also arguing the Chancellor should extend the furlough scheme, as well as welfare support, the business rates holiday and the stamp duty holiday through the next few months, and make the latter permanent.

Nigel Morris, employment tax director at MHA MacIntyre Hudson, said extending furlough was the “right call”.

He said: “We will all be paying for the cost of the Covid-19 support measures for a long time, and extending this scheme a little longer won’t massively increase this bill.”

Mr Morris said the best way to complement a CJRS extension was to revive a version of the Job Retention Bonus scheme.

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