Furlough extended: Why has Rishi Sunak extended furlough? How much will pay be?
Budget 2021: Predicted measures from Chancellor Rishi Sunak
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The Coronavirus Job Retention Scheme (CJRS), commonly known as the furlough scheme, has allowed people to keep earning during the pandemic. Currently, the furlough scheme allows employers to furlough staff for hours not worked and the Government will pay 80 percent of their usual wages, capped at £2,500 per month. The furlough scheme was expected to come to an end in April 2021.
Has furlough been extended?
Ahead of the Chancellor’s long-awaited Budget announcement later on Wednesday, March 3, the Treasury has now finally confirmed the furlough scheme will be extended.
Chancellor Rishi Sunak said: “Our Covid support schemes have been a lifeline to millions, protecting jobs and incomes across the UK.
“There’s now light at the end of the tunnel with a roadmap for reopening, so it’s only right that we continue to help business and individuals through the challenging months ahead – and beyond.”
Why has furlough been extended to September?
With lockdown restrictions expected to stay in place until at least June, many had been anxiously awaiting news of a possible extension to the furlough scheme.
As it stands, the earliest date that nightclubs could open, for example, is June 21.
So workers were hoping the scheme would be extended to cover the period their workplace will be forced to remain closed.
Kate Palmer, HR Advice and Consultancy Director at Peninsula, told Express.co.uk the news of the furlough scheme’s extension will be “extremely welcome” for businesses over the next few months.
Ms Palmer said: “A significant aspect of today’s Budget is the extension of the furlough scheme, something that has provided a lifeline to businesses across the country since it was originally put in place in March 2020.
“The news that it is going on until the end of September will undoubtedly be extremely welcome to many employers, especially those that are still not expecting to open until at least June, such as nightclubs.
“If all goes to plan, this means that the furlough scheme will remain an option for employers for a few months after restrictions are expected to be lifted entirely on June 21, which will hopefully help them to slowly bounce back from the major disruption they may have seen.”
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How much will furlough pay be?
Over the next stage of the scheme, furlough pay is expected to remain at 80 percent of salaries capped at £2,500 per month for employees.
However, later in the year employers will be expected to contribute more to their employee’s wages.
Employers will be expected to pay 10 percent towards the hours their staff do not work in July.
For August and September, employers will be expected to pay 20 percent of their staff wages for hours not worked.
Ms Palmer said: “An interesting development is that, once again, employers will be asked to start contributing to the scheme from July, something that we previously saw introduced last year as the Government aimed to wind the scheme down before it was extended.
“Whilst this may at first glance be concerning for employers, they should remember that by July, the Government is aiming for life to be, essentially, much more normal, and likely anticipate the need to use the scheme will be much diminished.
“However, whether this means they will start to clamp down on who can actually use it following June 21 does remain to be seen.”
When will furlough end?
The furlough scheme is expected to finally come to an end in September 2021.
By this point, it is hoped lockdown measures will have eased significantly and businesses will be able to operate normally.
However, if there are some sectors struggling after September, it is possible the Government could extend the furlough scheme in some way.
The Chancellor has made clear he will do “whatever it takes” to support businesses during the pandemic, so further support could be announced further down the line.
Rebecca Thornley-Gibson, Partner at law firm DMH Stallard, told Express.co.uk: “Possible extensions beyond September could be considered to support specific sectors but more likely are other support mechanisms such as VAT, business rates and loan support.
“As the extension doesn’t align with the anticipated end of social distancing restrictions on June 21, it is recognition that working life will not get back to pre-Covid normality immediately after restrictions end.
“And it certainly will not get back to normal for those employees already made redundant by employers who could not afford to wait for further furlough announcements.”
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