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Thu, 9 July 2020

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By IKEA

Rishi Sunak to spell out future of coronavirus furlough scheme amid calls to extend it

Rishi Sunak to spell out future of coronavirus furlough scheme amid calls to extend it

Chancellor Rishi Sunak is expected to announce changes to the job retention programme later today.

3 min read

Chancellor Rishi Sunak will outline the future of the Government’s furloughing scheme later, amid growing calls to extend it.

More than six million people across 800,000 employers are currently making use of the Coronavirus Job Retention Scheme, which sees the state pay 80% of their wages while they are put on leave.

The scheme was set up in a bid to avoid a wave of job losses after the Government told the public to stay at home and ordered the shutdown of vast swathes of the economy.

Mr Sunak last week promised that there would be no “cliff-edge” for businesses to face when the scheme is brought to an end - but he confirmed that the Treasury was looking to “wind down” the programme because its cost to the taxpayer was not “sustainable”.

It has been reported that the Chancellor - who is expected to unveil the changes in the Commons this afternoon - will extend the scheme’s endpoint from June to September.

But he is expected to cut government payments to 60% of earnings and allow employers to put staff on part-time hours while having their wages topped-up by the Government.
 
Speaking on Monday night, Boris Johnson said he did not want to steal Mr Sunak’s “thunder” ahead of the announcement - but he heaped praise on the furloughing scheme as “one of the most remarkable features of the government's response”.

The Prime Minister said: "It is unlike anything seen internationally, with 6.5 million people currently being supported. It is absolutely right that we should do it.

"One of the most salient and important features of this country's response to this crisis so far is that we have looked after some of the lowest-paid people in our society - the hardest-working people - and we will continue to do so."

"This policy has made a huge difference in this crisis" - Torsten Bell, the Resolution Foundation

The announcement from Mr Sunak comes amid calls to avoid a sudden drop-off in support for firms making use of the scheme.

Torsten Bell, chief executive of the Resolution Foundation think tank, said: "Moving too quickly could spark 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.

"This policy has made a huge difference in this crisis. It now needs careful and gradual change to ensure the benefits it has provided are secured rather than squandered."

And Mike Cherry, chairman of the Federation of Small Businesses, said firms were “in the middle of the worst downturn on record”.

He added: “The Government has stepped-up with a raft of support mechanisms to help them through. 

“It’s critical that these mechanisms are not suddenly removed, and that gaps in support are plugged quickly.

“The vast majority of small employers have furloughed staff and they’re telling us loud and clear that the ability to do so on a part-time basis as we move towards recovery will be key to keeping their operations afloat. 

“For firms that don’t have the green light to open until July at the very earliest in particular, we need to see schemes extended significantly – not least the job retention scheme.”

The SNP’s Treasury spokesperson Alison Thewliss said Mr Sunak should “extend the scheme, fix the serious gaps and ensure people get the support they need”.

And she warned: “I have businesses in my own constituency who haven’t yet received their payments, so talk of winding the scheme down is causing significant anxiety for businesses and employees alike.”

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