Chancellor Rishi Sunak extends furlough scheme until end of October

Chancellor Rishi Sunak has announced that the furlough scheme, which is paying the wages of millions of workers during the coronavirus lockdown, will be extended until the end of October.

Chancellor Rishi Sunak

He told the Commons the UK Government's Job Retention Scheme would be extended for another four months and that as businesses get back to work, furloughed workers could be able to return on a part-time basis.

At least 6.3 million people are currently having up to 80 per cent of their salaries paid by the taxpayer under the furlough system at a cost of some £8 billion.

It had been rumoured that financial support in the JRS could be cut to 60 per cent, but today, responding to an urgent question from Labour's shadow chancellor Anneliese Dodds, he said: “I can announce today that the Job Retention Scheme will be extended for four months until the end of October. By that point, we will have provided eight months of support to British people and businesses.”

He said the government was “doing everything we can” to protect jobs and help those unable to work, describing the JRS as a “world-leading economic intervention”.

He added: From August to October the scheme will continue for all sectors and ergions fo the UK but with greater flexibility to support the transition back to work.

“Employers currently using the scheme will be able to bring furloughed employees back part time and we will ask employers to start sharing with the government the cost of paying people’s salaries.”

Saying that full details of changes will be revealed by the end of the month, he added: “One thing won’t change – workers will through the combined efforts of government and employers continue to receive the same level of overall support as they do now at 80 per cent of their current salary up to £2500 a month.

“I’m extending this scheme because I won’t give up on the people relying on it. We stood behind businesses and workers as we came into this crisis and we will stand behind them as we come out of it.”

Addressing a point from Ms Dodds that government spokespeople had said people and businesses were “addicted” to the scheme and needed to be “weaned off”, he said: “The use of the word addiction is not one I have ever used or agree with.

“Nobody who is on this furlough scheme wants to be on this scheme. People up and down this country believe in the dignity of their work – going to work, providing for their families, it’s not their fault their business has been asked to close and they’ve been asked to stay at home, that is why I established this scheme – to support these people and their livelihoods at this critical time.”

He added: “I have already been talking to the TUC and CBI about the future of helping those to get back into work who may unfortunately may lose their jobs in this period, it’s something that weighs heavily on my mind, every person who loses their job is a person this government is determined to stand behind whether that’s with new skills, training or creating new jobs, that’s something I’m determined to make happen.”

SNP MP Alison Thewliss welcomed the extension and the announcement of flexibility, but asked for assurance that the scheme would continue in Scotland, Wales and Northern Ireland if lockdown continued for longer in devolved countries.

Mr Sunak said: “There will be no reduction in the level of support for those on the scheme, that is a commitment. It's crystal clear that those on the scheme have that reassurance.

“I committed to bringing forward further details by the end of this month in the technical details of implementing part time furloughing, but this is an extension for four months that will provide eight months of support in total to all regions and all sectors of the United Kingdom, and provides a very good and generous runway for businesses and firms to plan against and indeed start getting back to work when the time is right as was outlined by the Prime Minister’s plan.”

The announcement of the extension was cautiously welcomed by Citizens Advice Scotland, the Federation of Small Businesses and the CBI, who all said more detail on the changes around part-time returnees was needed.

CAS social justice spokesperson Mhoraig Green said: “The Job Retention Scheme is a vital measure to protect jobs during the Covid-19 pandemic. We welcome the news that the scheme is to be extended until October and the 80 per cent value will be protected.

“This is an important step in protecting incomes during these unprecedented times, as our evidence base suggests that people are facing serious issues with the cost of living.

“We need to see further details of how employers will be expected to contribute to the scheme without risking significant redundancies in sectors unable to open up safely before October. Leaving lockdown was always going to be serious challenge and Government has an important role to play in protecting the incomes of people affected by the crisis.”

Tracy Black, CBI Scotland Director, 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.”

She added: “Much change still lies ahead. The UK and Scottish governments 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. The greater the number of good businesses saved now, the easier it will be for the economy to recover.”

And Andrew McRae, FSB’s Scotland policy chair, said: “Today’s shrewd decisions from the Chancellor will give thousands of large and small Scottish employers the right sort of flexibility. The move to allow operators to partially furlough their staff while they consider how to get back up to speed should mean more businesses have the right tools at their disposal.

“In the coming weeks, smaller firms will want to understand the next steps for the scheme. Policymakers will need to carefully consider how to co-ordinate financial support for businesses with advice to firms about how and when to reopen safely.”

However, Matt Dowling, CEO of the Freelancer Club, a support network for the self-employed said more needed to be done to help those not paid through PAYE.

He said while the extension was “brilliant news” for employees on a payroll “it throws into sharp contrast the shameful treatment being meted out to the UK's five million self-employed and freelance workers.”

He added: “They are drowning, with no rescue on the horizon. Tomorrow, applications for the Self-Employment Income Support Scheme (SEISS) will open for this community, but we estimate that up to two million won't be eligible.

“That's millions of hard-working, talented people who are being pushed into truly heartbreaking circumstances. Frankly, they've been hung out to dry. The government cannot continue to support employees who happen to be on pay-roll without also addressing the wholly inadequate support system put in place for the freelance and self-employed. We urge them to act, fast.”

Scottish Greens Co-Leader Patrick Harvie MSP said he welcomed the furlough extension, but added that there would still be “uncertainty and anxieties” about how the changes would impact on how much people were being paid.

“We’re told that the furlough scheme will continue until October, but that the current rate is only guaranteed until July. Many workers already struggling to get by on 100 per cent of the minimum wage, let alone the 80 per cent they are currently receiving, now face the prospect of this level reducing further. Workers need security at a time of crisis, and the UK Government’s patchwork approach simply hasn’t provided that.

“The Prime Minister claims his government is led by the science, but its actions this week have made it clearer than ever that it is happy to put economic growth before lives.“

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