Chancellor extends furlough to end April 2021
17 Dec 2020
In a move to support businesses, the Chancellor has announced that the current furlough scheme will be extended to 30 April while covid business loans will now be available until the end of March
17 Dec 2020
The eligibility criteria for the UK-wide scheme will remain unchanged with 80% of salaries paid by the government under the furlough rules. These changes will continue to apply to all devolved administrations.
Aside the financial support for employees under the Coronavirus Job Retention Scheme (CJRS) extension, the Chancellor arguably had an eye on the potential fallout from further redundancies and job cuts in the spring when furlough was due to end.
The Treasury warned that ‘extending the CJRS until the end of April gives businesses certainty well ahead of the 45-day redundancy notice period, with the Budget [3 March] setting out the next phase of support more than 45 days before the new end date of the scheme’.
Chancellor Rishi Sunak said: ‘We know the premium businesses place on certainty, so it is right that we enable businesses to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our Plan for Jobs.’
Originally the Chancellor said he would review the employer contribution element of the CJRS in January, but decided to bring this forward to allow businesses to plan ahead for the remainder of the winter and the New Year.
Kate Palmer, HR Advice and Consultancy Director at Peninsula, said: ‘In light of today’s tiers announcement in England, coupled with the news that Wales is going into, essentially, another lockdown from 28 December, yet another extension of the furlough scheme is good news for businesses.
‘Now expected to run until the end of April, businesses will still be able to claim 80% of furloughed staff wages until this date. Furthermore, until we are told otherwise by the government, it looks like rules surrounding its use remain the same; employers can use the scheme for the first time if eligible.
‘While this is no doubt a bit of positive news in light of all the doom and gloom we seem to have seen of late; it also does suggest that the government expects coronavirus disruption to continue for some time. To this end, employers must consider how the furlough scheme can help them, and seek guidance on how to correctly use it if necessary.’
There has also been increasing pressure on the government from business lobby groups as more regions of England have been put under Tier 3 rules while Wales plans a further lockdown straight after Christmas.
In a further admission that businesses are being hard hit by the ongoing pandemic restrictions and ongoing hospitality closures, the deadline for applications for government-guaranteed Covid-19 business loans has been extended by two months to 31 March. These had been due to close at the end of January.
This gives longer access to the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, and the Coronavirus Large Business Interruption Loan Scheme.
There was also confirmation that the next Budget will be held on 3 March and will set out the next phase of the plan to tackle the virus and protect jobs.
This will be the first opportunity for the Chancellor Rishi Sunak to consider potential tax rises after he indicated that ‘there was a limit on the amount of sustainable borrowing’.
The Treasury statement stressed that ‘the extensions to the business loan and furlough schemes enable businesses to plan with certainty and access support in the first few months of the New Year ahead of the further update on wider Covid-19 economic support’.
So far, the Coronavirus Job Retention Scheme (CJRS) scheme has underwritten 9.6m jobs across the UK with more than one million businesses accessing loans during the pandemic.
The government will continue to pay 80% of the salary of employees for hours not worked until the end of April. Employers will only be required to pay wages, National Insurance Contributions (NICs) and pensions for hours worked; and NICS and pensions for hours not worked.
The schemes have already provided over £68bn in guaranteed loans, and helped to keep afloat business in all sectors of the UK economy who have been impacted by coronavirus.
The government has already announced that more support will be available beyond March, through a successor loan scheme. More details of the scheme will be announced in due course, with the government providing a further update on wider Covid-19 economic support at the Budget on 3 March.
The furlough and loan schemes are part of the government’s wider plan to support, create and protect jobs through its Plan for Jobs. This includes the Kickstart Scheme, more investment in training and skills as well as the Self Employment Income Support Scheme (SEISS) grant, with a fourth grant being made available from February to April 2021.