Covid-19: Furlough scheme changes in prospect
29 May 2020
As latest Treasury figures show 8.4m workers have been furloughed since lockdown began in March, at a cost to government of £15bn, Chancellor Rishi Sunak is expected to announce changes to the scheme, requiring employers to make a contribution
29 May 2020
The coronavirus job retention scheme, introduced as the pandemic shutdown began, includes the facility for companies to furlough staff, who are paid 80% of their usual earnings up to a ceiling of £2,500 a month.
The scheme was originally scheduled to end in July, but in mid-May Sunak announced a four-month extension to the end of October.
He is now expected to say that from the end of July, changes will be made to the scheme. These are likely to include a requirement for companies to pay 20% of wages for furloughed staff from August.
Nic Redfern, finance director at financial product comparison site, Know Your Money, said: ‘Today’s news, though forewarned, will add to the worries of many business leaders. A recent Know Your Money survey showed that half of UK businesses have employees on furlough – the fact the Government is reducing its support through the scheme will significantly increase the financial burdens on millions of companies.
‘Unfortunately, a steady reduction in financial support from the public sector is inevitable and we will see much more of it in the weeks ahead. The Government is borrowing heavily to prop up businesses at this difficult time, but there is a limit to how much Rishi Sunak and his team can do, and for how long.
‘Businesses will need to assess their finances carefully and explore other support available to them if they are to ensure they are adequately prepared for the tapering down of the furlough scheme.’