12/05/2020

Covid-19 – Furlough scheme to be extended to October

12/05/2020

Covid-19 – Furlough scheme to be extended to October

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Chancellor Rishi Sunak has today revealed plans for the extension of the UK government’s Coronavirus Job Retention Scheme.

Updating MPs in a statement from the House of Commons, Sunak confirmed that the furlough scheme – which he described as a “world-leading economic intervention” will now run for an additional four months, until the end of October 2020.

He also confirmed in his statement that 7.5 million jobs have so far been preserved by the furlough scheme, and that the government will continue to do everything they can to protect those who are unable to work.

Initially proposed for three months, from March to May, the scheme was extended a further month until the 30th June, before today’s unprecedented announcement to extend it until October.

80% salary support to continue

Mr. Sunak also offered his reassurance that those workers who have been furloughed will receive the same level of support at 80 per cent of their current salary, or up to £2,500 per month.

He explained, “I’m extending this scheme because I won’t give up on the people who rely on it. Our message today is simple. We stood behind Britain’s workers and businesses as we went into this crisis, and we will stand behind them as they come out the other side.”

The Chancellor took the opportunity to debunk any suggestion he had previously stated the UK public was addicted to the furlough scheme. “Nobody who is on the furlough scheme wants to be on the scheme. People up and down this country believe in the dignity of their work. Going to work, providing for their families.

“It is not their fault their business has been asked to close, it is not their fault they have been asked to stay at home, and that is why I established this scheme, to support these people and their livelihoods at this critical time.”

Scheme to gradually become more flexible

There will be no changes to the current terms of the furlough scheme until the end of July.

In August, September and October, it will continue with more flexibility, allowing for more employers to bring their furloughed employees back to work on a part-time basis.

The Chancellor has also suggested that although the figure paid out would continue at the current rate for the full eight months for employees, this may have to be subsidised by companies on the scheme.

Employers may also be asked to share details of their salary outgoings with the government in coming months. The Treasury is expected to share full details of exactly how the scheme will be adapted by the end of May.

It’s believed that the continuation of the scheme until the end of July will cost an additional £10 billion to the taxpayer, according to one projection offered by the Institute for Fiscal Studies (IFS).

The Chancellor also confirmed he has been in talks with the trades union congress and the CBI about measures to help those who may still lose their job, saying “Every person who loses their job during this difficult period is a person that this government is determined to stand behind, whether that’s with new skills, new training or indeed supporting working with businesses to create new jobs.”

Furlough extension broadly welcomed

Dame Carolyn Fairbairn, Director-General of the Confederation of British Industry has welcomed the announcement, saying, “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.

In her daily press briefing, First Minister Nicola Sturgeon also welcomed the news of the furlough scheme extension, saying, “There has to be support in place as long as we’re asking businesses not to operate as normal. We have to avoid cliff-edges.”

Torsten Bell, Chief Executive of the Resolution Foundation think tank also welcomed the decision, after cautioning against a cliff-edge exit last week, tweeting, “This is broadly the right approach. Moving too quickly could have sparked a huge second surge in job losses at a time when unemployment already looks set to be at the highest level for a quarter of a century.”

He also warned that “the devil will be in the details”, highlighting challenges ahead for HMRC and a careful calibration of how much firms should contribute to avoid “unnecessary redundancies”.

Scotland to maintain lockdown, as England relaxes guidance

Nicola Sturgeon confirmed today that the Scottish government is working to develop its own guidance on safe workplaces, following some divergence from the Prime Minister’s plans to relax lockdown.

On Sunday, Boris Johnson announced that certain workers in England would now be actively encouraged to go back to work, as well as confirming that as of Wednesday, garden centres will reopen, and the public can travel to outdoor spots to exercise.

He also confirmed that the message to ‘Stay home’ has been adjusted to ‘Stay alert’ in England.

However, In Scotland and the rest of the UK, a more cautious approach has been adopted, with First Minister Nicola Sturgeon reaffirming the stance that it’s too soon for Scotland to take such measures.

Ms Sturgeon said: “For Scotland right now, given the fragility of the progress we’ve made, given the critical point that we are at, it would be catastrophic for me to drop the stay at home message, which is why I’m not prepared to do it.”

The only change currently in Scotland is that outdoors exercise will now be unlimited, and Sturgeon has pointed out that Johnson’s proposed easing of the lockdown is only related to England.

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