The Chancellor has announced that the furlough scheme will be extended to the end of September with employers expected to make additional contributions from July
For employees there will be no change to the terms of the Coronavirus Job Support Scheme which will remain available until the end of September 2021 across the UK. As businesses reopen the government will ask employers to contribute, from July there will be a 10% contribution and then 20% through August and September.
There will be no employer contributions beyond National Insurance contributions (NICs) and pensions required in April, May and June. From July, the government will introduce an employer contribution towards the cost of unworked hours of 10% in July, 20% in August and 20% in September, as the economy reopens.
Furloughed jobs rose from 4 million at the end of December to 4.7 million at the end of January. Since March 2020, the Coronavirus Job Retention Scheme has supported the wages of 11.2 million people.
Kate Palmer, HR advice and consultancy director at Peninsula, said: ‘As the government plans to relax lockdown restrictions, hopefully for the last time, it has remained clear that the pandemic's ongoing impact on businesses is far from over.
‘A significant aspect of today's Budget is the extension of the furlough scheme, something that has provided a lifeline to businesses across the country since it was originally put in place in March 2020. The news that it is going on until the end of September will undoubtedly be extremely welcome to many employers, especially those that are still not expecting to open until at least June, such as nightclubs.
‘If all goes to plan, this means that the furlough scheme will remain an option for employers for a few months after restrictions are expected to be lifted entirely on 21 June, which will hopefully help them to slowly bounce back from the major disruption they may have seen.’
John Harding, head of employment taxes at PwC, said: ‘The government has been at pains to stress that it will support businesses in line with the roadmap out of lockdown, so it comes as no surprise that the furlough scheme has been extended to the end of September. The announced arrangements are similar to those in place last summer when the Chancellor reduced the level of support in anticipation of closing the scheme in October 2020.
‘The extension of the furlough scheme, which has already cost in the region of £54bn since it was first introduced 12 months ago, is likely to set back the Exchequer another £10bn. It will be welcomed by many businesses, particularly in sectors of the economy currently slated as being last on the roadmap to emerge from lockdown, who can now see the light at the end of the tunnel. The scheme has provided a lifeline to more than 1.3m businesses.'