Rishi Sunak has confirmed the furlough scheme will be extended to October with 80 per cent of wages being covered – for now.
In the House of Commons, the chancellor confirmed that the level of support for employees will not be reduced, but employers will be asked to contribute more from the end of July.
In a tweet, Sunak said: ‘From August to October the scheme will continue, for all sectors and regions of 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.
‘We will ask employers to start sharing, with the government, the costs of paying people’s salaries.
‘Further detail will follow by the end of May, but I want to assure people one thing won’t change: Workers will, through the combined efforts of government and employers, continue to receive the same level of support as they do now, at 80 per cent of their salary, up to £2,500.
‘It’s crystal clear that those on the scheme have that reassurance – the level of support that they receive will not be changed.’
[Rishi in Commons, 1:46 video]
He said today’s announcement means the scheme will have run for eight months.
Speaking to Car Dealer Live at lunchtime today, Wessex Garages MD Chris Wiseman was told the news as it broke live.
He told us: ‘It’s good news. I think the government support through this has been phenomenal. I hate to think the numbers that are being bandied around and what it’s costing us but necessary for businesses to secure.
‘And let’s hope we won’t need all that for all of the period. But I think it’s probably an indication that they think retail will be slightly slower.’
Introduced in March, the Coronavirus Job Retention Scheme was initially due to run until the end of June – although that was always open to review.
1/ 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. Until the end of July, there will be no changes to the scheme whatsoever. pic.twitter.com/gQznY4c2Ir
— Rishi Sunak (@RishiSunak) May 12, 2020
Since then, more than one in five workers in the UK – some 7.5m employees – have gone on the leave of absence, with 80 per cent of their salary up to £2,500 per month paid by the government, costing it more than £8bn so far.
Answering questions from shadow chancellor Anneliese Dodds about people being addicted to the scheme, Sunak said: ‘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 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.’
Sunak told MPs he had held talks with the TUC and CBI about the future of helping people back into work, telling the Commons: ‘It is something that weighs heavily on my mind – every person who loses their job through this difficult period is a person that this government is determined to stand behind.’
He said this could include providing training or helping businesses to create new jobs.
TUC general secretary Frances O’Grady, responding to the government’s extension of the furlough scheme, said: ‘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 per cent is a win for the pay packets of working families.
‘As the economic consequences of Covid-19 become clear, unions will keep pushing for a job guarantee scheme to make sure everyone has a decent job.’
Edwin Morgan, director of policy at business group the Institute of Directors, said plans for part-time returns by the government were welcome.
He added: ‘A part-time furlough provides a much-needed launch ramp so businesses can start to get back up to speed. A more flexible approach will allow firms to raise activity levels in tandem with demand, helping to avoid cashflow challenges.
‘We now need further clarity around employers’ contributions. Many firms that would normally be on a strong footing are still in dire straits.
‘The extension puts yet more onus on helping those who have been left out in the cold. Countless small company directors have found scant support, and government shouldn’t turn a blind eye to them.’
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