Furlough scheme extended until March by Chancellor Rishi Sunak

The jobs furlough scheme set up in the wake of the Covid-19 outbreak will be extended until the end of March, Chancellor Rishi Sunak has told the Commons.

By Robert Parsons
Thursday, 5th November 2020, 12:44 pm
Updated Thursday, 5th November 2020, 2:33 pm

The Coronavirus Job Retention Scheme (CJRS), which Mr Sunak launched at the start of the pandemic, will see employees receiving 80 per cent of their current salary for hours not worked.

The furlough scheme, which was initially supposed to taper off over the Autumn, was extended until December 2 as the impact of the second wave of coronavirus became clear. But the Government is now going further so that support can be put in place for long enough to help businesses recover and get back on their feet.

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Similarly, support for millions more workers through the Self-Employment Income Support Scheme (SEISS) will be increased, with the third grant covering November to January calculated at 80 per cent of average trading profits, up to a maximum of £7,500.

Mr Sunak told the Commons: "We can announce today that the furlough scheme will not be extended for one month, it will be extended until the end of March. The Government will continue to help pay people's wages up to 80% of the normal amount. All employers will have to pay for hours not worked is the cost of employer NICs and pension contributions.

"We will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more."

There are currently no employer contribution to wages for hours not worked. Employers will only be asked to cover National Insurance and employer pension contributions for hours not worked.

Chancellor Rishi Sunak in Northallerton earlier this year

The Richmond MP said he had to make "rapid adjustments" to the Government's economic response to Covid-19 pandemic owing to how the virus has spread.

He told the Commons: "I know that people watching at home will have been frustrated by the changes the Government has brought in during the past few weeks.

"I have had to make rapid adjustments to our economic plans as the spread of the virus has accelerated."

And he said the Government's highest priority remains "to protect jobs and livelihoods". The Chancellor told MPs: "The Bank's forecasts this morning show economic activity is supported by our substantial fiscal and monetary policy action.

"And the IMF just last week described the UK's economic plan as aggressive, unprecedented, successful in holding down unemployment and business failures, and one of the best examples of co-ordinated action globally. Our highest priority remains the same: to protect jobs and livelihoods."

It emerged this week that the UK's worst-paid workers were more than 20 times more likely to be furloughed on reduced pay than the highest earners, data has shown.

More than half - 51.7% - of workers who were usually paid less than £8.72 per hour were furloughed with a pay cut, compared with 2.5% of those earning more than £29.67.

Henri Murison, director of the Northern Powerhouse Partnership, said "This will be very welcome news for many as we go into a second national lockdown and should go a long way to protecting many thousands of viable jobs in the North, avoiding the impending cliff edge in a few weeks time.”

"However, just as critical will be a Northern Economic Recovery Plan to create more jobs and promote economic growth in the long-term, led by businesses and Metro Mayors here in the North."

Federation of Small Businesses national chairman Mike Cherry welcomed the extension, calling it "bold and much-needed" to provide confidence to firms

He added: "It's encouraging to see the extension of generous support to around two million self-employed people - who don't enjoy many of the benefits afforded to employees, and are the employers of the future - outlined today."

The move comes after the Government continually resisted pressure to extend the furlough scheme. It is understood the Treasury has not put a cost on extending the furlough initiative through to March as it will depend on take-up levels.

But it has so far cost about £5 billion a month.

The Chancellor defended the Government's actions in the face of the Covid crisis, and insisted the second lockdown in England is the "only viable solution left to protect our NHS".

He told MPs: "Given these changed public health restrictions and the economic trauma they would cause in job losses and business closures, I felt it best to extend the furlough scheme rather than transition at that precise moment to the new job support scheme.

"Political opponents have chosen to attack the Government for trying to keep the economy functioning and to make sure the support we provide encourages people to keep working

"And they will now no doubt criticise the Government on the basis that we have had to change our approach. But to anyone in the real world that's just the thing you have to do when the circumstances change."