Chancellor confirms furlough extension

By James McAllister

- Last updated on GMT

Furlough scheme extended until March 2021 Chancellor confirms Coronavirus lockdown

Related tags Coronavirus lockdown Furlough Job Retention Scheme

Chancellor Rishi Sunak has further extended the Job Retention Scheme (JRS) until March 2021.

Employees will continue to receive 80% of their current salary for hours not worked, up to £2,500, with employers responsible for covering National Insurance and pension contributions.

It comes as England is plunged into a second national lockdown that will see hospitality venues across the country forced to remain shut for at least the next four weeks​​, except for takeaway and delivery.

The JRS had originally been set to come to a close on 31 October, to be replaced by the less generous Job Support Scheme (JSS), but this was reversed in light of the second lockdown, with Prime Minister Boris Johnson originally saying that the scheme would only be extended for the duration of the new lockdown.

During his address to the House of Commons today (5 November), the Chancellor confirmed that in light of the JRS extension, the Job Retention Bonus – a £1,000 payment to firms for retaining furloughed staff until the end of January – would be scrapped.

He also assured the devolved administrations that the furlough scheme will be available for them until March.

The JRS extension will be reviewed in January to examine whether the economic circumstances are improving enough for employers to be asked to increase contributions.

"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," said Sunak.

"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."

Earlier today, the Bank of England announced a fresh £150bn stimulus package as part of a co-ordinated push with the Government to try and safeguard jobs and growth through a difficult winter ahead.

Yesterday (4 November), Johnson refused to rule out the possibility of extending the lockdown beyond the initial four week period​ when questioned by Labour leader Sir Keir Starmer.

“Will the lockdown end on 2 December, come what may, or will it depend on circumstances at the time? People need to know that,” Starmer asked.

Johnson responded: “These autumn measures to combat the surge will expire automatically on 2 December, and we will then, I hope very much, be able to get this country going again, to get businesses, to get shops going again in the run-up to Christmas.

“But that depends on us all doing our bit now to make sure that we get the R down. I have no doubt that we can.”

While MPs approved plans for the second lockdown in a vote yesterday afternoon, several Conservative MPs have already said they could not support any extension beyond 2 December.

Trade body UKHospitality welcomed the announcement of the furlough scheme extension, but once again warned that a broader package of support will still be needed to ensure businesses survive the next six months.

“Extending the furlough scheme is a big boost and will help secure hospitality jobs in the medium term across the whole of the UK.

"Keeping jobs alive during this lockdown and throughout a bleak-looking winter period, which is likely to see businesses trading under severe restrictions, is key to the future survival of the sector.

“Hospitality is facing a tough winter ahead, though, and businesses will need additional support if they are to survive. We will need enhanced grant support to keep venues alive and a solution to the ongoing rent debt problem that continues to linger over the sector.

"These must come alongside a clear roadmap for a return to business. Without these, the extended furlough scheme alone is not enough to keep hospitality alive and will have been a wasted investment of public funds.

“Surviving the winter is just the first step, too. Beyond that we need action to ensure that businesses can be revived and the sector can play its part in rebuilding the economy.

"Extending the VAT cut and business rates holiday, coupled with extensive Government promotion of tourism and hospitality, will be the bare minimum required.”

Jane Pendlebury, CEO of the Hospitality Professionals Association (HOSPA), added that the furlough extension likely points to the lockdown being extended.

“The extension of the furlough scheme is, of course, very welcome news for the hospitality industry," she said.

"However, I can’t help but feel it’s somewhat ominous. Does this mean that lockdown will be extended beyond 2 December? I suspect so.

"As a sector, we’ve been incredibly grateful for the support we’ve received from the Government. It’s served to keep many of us going through the most challenging of times.

"But, despite this support, there are many previously viable businesses that have had to shut their doors for good. So, whilst we welcome the latest round of measures as a good thing, if lockdown is extended again there will inevitably be many more businesses that go under.

"It goes without saying that, of course, we recognise the need to do whatever is necessary to counteract the virus and save lives, but the gradual disintegration of the hospitality industry, as venues survive one period of lockdown, but not the next, will have a huge knock-on effect.

"Hundreds of thousands of people’s livelihoods hinge on hospitality, and there is only so long that they can hold on.”  

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