The Chancellor will extended the furlough scheme to the end of September in his Budget today but firms will have to pay more towards the costs.
Employers will be expected to pay 10 per cent towards the hours their staff do not work in July and this will increase to 20 per cent in August and September.
Employees will continue to receive 80 per cent of their salary for hours not worked until the scheme ends.
It had been due to close at the end of April.
The motor trade has extensively used the furlough scheme as showrooms have been closed during three lockdowns.
Staff from across dealer businesses have been placed on the scheme and with larger dealer groups claiming millions of pounds in aid.
The Coronavirus Job Retention Scheme has protected more than 11m jobs since its inception.
The Chancellor is due to make his Budget statement to the Commons at 12.30pm today and he will host a press conference at 5pm following the announcement.
Further support for self-employed workers will also be announced, with more than 600,000 people – many of whom became self-employed in 2019/20 – now eligible for cash grants.
A fourth grant from the Self-Employment Income Support Scheme will be available to claim from April, worth 80 per cent of three months’ average trading profits up to £7,500, while the Chancellor will set out details of a fifth grant.
The Treasury said that hundreds of thousands more people will be eligible for the grants this time, as tax return data for 2019/20 is now available. Sunak faced criticism that newly self-employed people were unable to benefit from the scheme previously.
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.’
The Chancellor will pledge to use the government’s full ‘fiscal firepower’ to protect jobs and livelihoods, vowing to do ‘whatever it takes’ to help businesses and people.
The extension to the furlough scheme was welcomed by business organisations, with the CBI’s chief economist Rain Newton-Smith saying it will keep ‘millions more in work and give businesses the chance to catch their breath as we carefully exit lockdown’.
Len McCluskey, of Unite, said the scheme should be extended until 2022.
Sunak is also expected to outline plans to allocate:
- £5bn for a new grant scheme to help businesses
- £1.65bn to boost the UK’s vaccine roll-out
- £520m to support small UK businesses with training and software
- £410m to support the culture sector
- £300m to help cricket, tennis and horse racing in a summer sports recovery package
- £150m to help local communities save struggling pubs, sports clubs, theatres and Post Offices
- £2.8m to help fund a joint UK and Ireland bid to host the 2030 football World Cup
The Chancellor is reportedly planning to extend the stamp duty holiday until the end of June, while The Times also said the business rates holiday for the retail, hospitality and leisure sectors will also be continued along with the VAT cut for hospitality and tourism.
A freeze on fuel duty looks set to continue, but Sunak is said to be considering raising corporation tax to as much as 25 per cent from 19 per cent.
Sunak spoke to the Queen yesterday ahead of his Budget, as per tradition.
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