UK furlough scheme extended until October 2020

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The UK government’s furlough scheme to pay wages of workers on leave because of the impact of coronavirus has today been extended to October.

Chancellor of the Exchequer Rishi Sunak said the government-backed plan which aids workers and companies through the crisis will also have new additions to the scheme in due course.

Sunak confirmed that employees will continue to receive 80% of their monthly wages (up to £2,500), but that companies will need to help share the costs of the scheme from August.

Around 7.5 million workers across the UK are now covered by the scheme.

In response to the announcement, Dame Carolyn Fairbairn, CBI Director-General, said: “The Chancellor is confronting a challenging balancing act deftly. As economic activity slowly speeds up, it’s essential that support schemes adapt in parallel.

“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.

“Firms will, of course, want more detail on how they will contribute to the scheme in the future and will work with Government to get this right.

“Above all, the path of the virus is unpredictable, and much change still lies ahead. The Government must continue to keep a watchful eye on those industries and employees that remain at risk. All schemes will need to be kept under review to help minimise impacts on people’s livelihoods and keep businesses thriving.

“The greater the number of good businesses saved now, the easier it will be for the economy to recover.”


IoD responds to furlough extension

Responding to the Chancellor’s announcement of an extension to the furlough scheme (JRS), Edwin Morgan, Director of Policy at the Institute of Directors, said: “A furlough extension will bring significant relief to employers and workers across the country.

“We’re delighted the Treasury has taken on the IoD’s consistent calls for a flexible furlough. Many firms will be operating far below normal capacity for the foreseeable future. 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 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.”


Industry reaction

Commenting on the Chancellor’s announcement today that the Coronavirus Job Retention Scheme will be extended to October, Business West Managing Director Phil Smith said: “The extension of the Job Retention Scheme will come as a huge help and a huge relief for businesses in South West England.

“The Chancellor is once again listening to what we’ve been saying, and the changes planned will help businesses bring their people back to work through the introduction of a part-time furlough scheme. We will engage with the Treasury and HMRC on the detail to ensure that this gives companies the flexibility they need to reopen safely.

“Our research shows that the scheme has become a key part of wider government support for businesses, with more than 70 per cent of firms surveyed furloughing a portion of their staff.

“Over the coming months, the government should continue to listen to business and evolve the scheme in line with what’s happening on the ground. Further support may yet be needed for companies who are unable to operate for an extended period, or those who face reduced capacity or demand due to ongoing restrictions.”


Emma Jones, founder small business support network, Enterprise nation, said: “This will be a relief to the small firms who are unable to operate in the short term. They may now have the ability to work on shaping and developing the business in readiness for when we emerge from this crisis. The number of businesses approaching us for advice on finance has already moved on to those looking for support to build new skills and make plans for re-opening.

“We think the part-time furlough idea for directors is important, but again we’d like to hear more details about how this will operate in practice.

“One caveat to all of this is the nervousness around the mounting but inevitable cost to the taxpayer.”

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