The coronavirus job retention scheme (CJRS) is to be extended until next March, marking a year of furlough, following the introduction of national lockdowns resulting in a deteriorating economic situation, Chancellor Rishi Sunak has announced
The furlough scheme was originally due to end on 31 October, and Sunak has already announced a one month extension for November, coinciding with tighter Covid-19 measures in England.
Addressing the House of Commons, Sunak has now said that it will be further extended until the end of March, with the government paying 80% of the wages of furloughed staff and employers paying only for employer National Insurance contributions (NICs) and pension payments for the hours not worked.
‘When we extended the scheme in November, people and businesses asked what would happen next, and this announcement is to give them certainty going forward,’ Sunak said.
This means the furlough scheme will have been in place for a year. Sunak said the Treasury would review the scheme in January, in order to assess whether employers should make more of a contribution.
Sunak said the extension came in response to a recent assessment by the Bank of England, which has intervened to offer a £150bn boost to the economy, saying that the downside risks had increased and highlighting significant uncertainty about the timescale for recovery.
As a result of the extension, the job retention bonus previously announced, which was supposed to support employers who retained previously furloughed staff until January, has been mothballed.
Sunak said it would be released incrementally ‘at the appropriate time’.
The Chancellor also announced that the next instalment of the self employed income support scheme for November to January will be increased to 80% of average profits up to a cap of £7,500, up from 55%.
He emphasised that the funding guaranteed for the devolved regions will be increased from £14bn to £16bn, to bring furlough payments in Scotland, Wales and Northern Ireland in line with England, so that the UK as a whole had the same level of support.
Under the previous three-tier system of Covid-19 measures, there had been criticism that some regions were missing out on support payments.
Sunak said: ’I’ve always said I would do whatever it takes to protect jobs and livelihoods across the UK - and that has meant adapting our support as the path of the virus has changed.
‘It’s clear the economic effects are much longer lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support.
‘Extending furlough and increasing our support for the self-employed will protect millions of jobs and give people and businesses the certainty they need over what will be a difficult winter.’
Simon Michaels, partner at accountancy firm HW Fisher said: ‘Businesses will be able to breathe a sigh of relief for the first time in months. It’s not over yet, but an extension to furlough is a positive step. It continues to be a serious time for British business.
‘This is the first time a longer term strategy for British business has been shared since March. The government has wasted time on short term updates, minor tweaks and knee jerk reactions – a longer term strategy is the key to building longer term business confidence.
‘The next step, is to focus on life beyond furlough – the scheme cannot last forever, and neither can other government support packages. We need to see an exit strategy and government should not delay on this.’