The furlough scheme looks set to be extended to September today with the chancellor likely to cut support for staff’s wages from 80 per cent to 60 per cent.
Rishi Sunak is likely to today announce the scheme, currently supporting 6.3m people and paying up to £2,500 a month, will be extended throughout the summer.
Car dealers have been desperate to hear news that the scheme will be continued past June 30 as many simply won’t have the work for their staff to return to immediately.
It is a similar picture for firms across the country as the economy attempts to slowly get back on its feet following the pandemic.
[Boris unveils plan in parliament, 1:21 video]
There were rumours in the weekend’s papers that the scheme could support a return to work part time for furloughed workers, with employers paying part of their wages, and the state the rest.
Those emerged after a call between the business secretary secretary Alok Sharma and business leaders at the end of last week.
Sunak last week warned the furlough scheme was not ‘sustainable’ at its current rate although he promised there would be no ‘cliff edge’ cut-off.
Speaking to ITV News, he said: ‘To anyone who is anxious about this I want to give them reassurance there will be no cliff-edge to the furlough scheme. I am working as we speak to work out the most effective way to wind down the scheme and ease people back into work.’
However, Sunak has previously said he needed to ‘wean’ workers and businesses off the programme as it currently costing the state billions.
Torsten Bell, chief executive of the Resolution Foundation think tank and an early advocate of the scheme, said it should be phased out gradually.
He 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.’
Meanwhile, there have been calls for the scheme to be tapered off on a sector-by-sector basis with industries worst hit sheltered by the scheme for longer.
Managing director of leisure operator GLL, Mark Sesnan said: ‘Industries such as leisure and hospitality should be protected.
‘This is because, in order to adhere to social distancing guidelines, we will have to operate at a significantly reduced capacity.
‘In turn, this will have a major impact on the number of staff able to return to work fully.’
The prime minister Boris Johnson said he does not expect a sudden flood of people heading back to work following Monday’s publication of the government’s road map for lifting the lockdown.
Speaking at the daily No 10 press briefing yesterday, Johnson said the measures – including allowing unlimited outdoor exercise – were ‘baby steps’.
And he warned the government stood ready to reimpose controls if there was any sign of the transmission rate of the virus picking up again.
The chancellor will make a statement on the furlough scheme extension today (May 12).
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