Home News Furlough scheme: Sunak announces major changes as workers to return part-time

Furlough scheme: Sunak announces major changes as workers to return part-time

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Rishi Sunak outlined changes to the job retention scheme, which has so far covered the wages of 8.4 million staff unable to work during lockdown – costing £15 billion. Ministers have said they will extend the scheme covering 80 percent of workers’ salaries up to £2,500 per month until the end of October, with employers expected to make a contribution. Treasury sources did not deny reports that the Chancellor will ask employers to contribute around 20 percent of wages, as well as National Insurance and pension contributions from August.

Speaking at Downing Street, Mr Sunak said: “The furlough scheme cannot continue indefinitely.

“Two weeks ago I said the furlough scheme will continue until October.

“I believe it is right to ask employers to contribute alongside the taxpayer towards the wages of their staff.

“In June and July the scheme will continue as before with no employer contribution at all.”

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“In August, the taxpayer contribution to people’s wages will stay at 80 percent.

“Employers will only be asked to pay National Insurance and employer pension contributions, which, for the average claim, account for just 5 percent of total employment costs.”

Unions and employers are united in support for the programme which, while common in other European countries, represented a major shift for the ruling Conservative Party and its traditional free-market instincts when it was launched in March as the coronavirus crisis engulfed the world economy.

Carolyn Fairbairn, head of the Confederation of British Industry, said: “The changes announced will help ensure the schemes stay effective as we begin a cautious recovery.”

Len McCluskey, leader of Unite, one of Britain’s biggest trade unions, welcomed the changes too but said the government now had to provide more support for sectors hit hardest by the crisis such as aviation and hospitality.

“Without such assistance, and soon, many businesses will simply shut up shop resulting in the mass unemployment the chancellor has sought to avoid these past two months,” he said.

The Government will cover 70 percent of wages up to £2,190 in September, with employers to pay National Insurance and pension contributions and 10% of wages, representing 14 percent of the gross employment costs.

The following month, the Treasury will pick up 60 percent of wages up to a cap of £1,875, with employers paying tax contributions and 20 percent of wages, representing 23 percent of the gross employment costs, the Government said.

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It added that only 40 percent of businesses had claimed the pension contributions since the scheme was launched.

Officials added that companies can be flexible with their definition of “part-time” as long as a full-time employee has not returned to normal hours.

The Treasury said: “Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them – and will be responsible for paying their wages while in work.”

Since it was launched, the CJRS has been used by one million businesses to support 8.5 million jobs, at a cost of £15 billion so far.

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