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Tue, 4 August 2020

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Coronavirus: Furlough scheme extended for another four months - but workers allowed to return part-time from August

Coronavirus: Furlough scheme extended for another four months - but workers allowed to return part-time from August

The Chancellor was speaking in the Commons on his 40th birthday (PA)

5 min read

Chancellor Rishi Sunak has announced that the coronavirus furlough programme will be extended until the end of October.

And he confirmed the Job Retention Scheme (JRS) will keep paying 80% of people’s wages - up to £2,500 per month - as they stay at home during the pandemic until the end of July.

But he hinted the terms of the policy will change from August, with furloughed employees able to return to work part-time, but employers expected to cover more of the cost.

Speaking in the House of Commons, Mr Sunak said the scheme “has been a world-leading economic intervention, supporting livelihoods and protecting futures”.

He said so far 7.5 million jobs have been furloughed from almost one million businesses suffering from the dramatic impact the Covid-19 crisis has had on the UK.

The Chancellor said: “And as we reopen the economy we will need to support people back to work. We will do so in a measured way.

“I can announce today 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 added: “Until the end of July, there will be no changes whatsoever.  Then from August to October the scheme will continue for all sectors and regions of the UK but with great 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.”

The Cabinet minister said full details will be announced by the end of May, explaining: “But I want to assure people today of one thing that 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% of their current salary - up to £2500 a month.”

He finished his statement in response to an Urgent Question by Labour by saying: “Our message today is simple.

“We stood behind Britain's workers and businesses, as we came into this crisis. And we will stand behind them as we come through the other side.”

In response shadow chancellor Anneliese Dodds asked about comments attributed to Government officials suggesting people need to be "weaned off an addiction" to the furlough scheme.

She said people do not want to be furloughed, adding: "It's critically important they are not penalised for that choice. 

“We welcome the flexibility mentioned, we've asked for this repeatedly."

Mr Sunak replied: "The use of the word 'addiction' is not one I have ever used and not one I agree with. Nobody who is on the 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 or asked to stay at home."

His announcement was welcomed by the TUC, with general secretary Frances O’Grady saying: "We are pleased ministers have listened to unions and extended the job retention scheme to the autumn. This will be a big relief for millions.

"Changing the rules to allow part-time working is key to enabling a gradual and safe return to work. 

“And maintaining the rate at 80% is a win for the pay packets of working families."

And it was well-received by business groups, with Mike Cherry from the Federation of Small Businesses saying: “The Job Retention Scheme is a lifeline which has been hugely beneficial in helping small employers keep their staff in work, and its extension is welcome. 

“Small employers have told us that part-time furloughing will help them recover from this crisis and it is welcome that new flexibility is announced today.”

The British Chambers of Commerce director general Adam Marshall said it will “come as a huge help and a huge relief for businesses across the UK”.

And Dame Carolyn Fairbairn from the CBI said: “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.”

But the chair of the Treasury select committee, Tory MP Mel Stride, said he wanted to see the full details of the planned changes to the scheme.

“The devil though will be in the detail, which will be set out later this month when the Treasury Committee looks forward to carefully scrutinising these changes," he said.

“The Chancellor also said that there will be no changes to the scheme until July. 

“This will be worrying for those who continue to fall through the gaps of the Government’s support measures such as the lack of furlough support to help cover dividend income generated through self-employment."

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Coronavirus Economy
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