Sunak extends furlough beyond summer

By James McAllister

- Last updated on GMT

Furlough scheme extended until end of September with contributions from employers from July Budget 2021 hospitality

Related tags Budget Furlough Job Retention Scheme Government

Chancellor Rishi Sunak will extend the Coronavirus Job Retention Scheme (JRS) until the end of September in his Budget today (3 March).

The scheme had been due to expire at the end of April, but calls have been growing for it to be further extended to help protect jobs as restrictions are gradually lifted in the months ahead.

Sunak will confirm that the JRS will continue in its current form - paying 80% of employee wages up to £2,500 a month, with employers covering the costs of pension and National Insurance contributions - until the end of June, by which time it is hoped all social distancing measures will have been relaxed.

In July employers will be expected to pay 10% towards the hours their staff do not work, increasing to 20% in August and September.

More support will also be announced for self-employed workers, with more than 600,000 people, many of them newly self-employed last year, becoming eligible for cash grants.

Speaking ahead of the Budget, the Chancellor said: "Our Covid support schemes have been a lifeline to millions, protecting jobs and incomes across the UK.

"There's now light at the end of the tunnel with a roadmap for reopening, so it's only right that we continue to help business and individuals through the challenging months ahead - and beyond."

While the decision to extend the scheme will be welcomed by the hospitality sector, businesses will be disappointed at the Government's decision to continue demanding employers cover the costs for NI and pension contributions.

Last month it was reported that furlough is costing the UK hospitality industry in excess of £542m a month​ during lockdown.

“Extending the full scheme up to and beyond the point of full reopening of the sector is a welcome move," says UKHospitality chief executive Kate Nicholls.

"It will help keep businesses afloat and more jobs secure as they trade their way back to prosperity in the years to come. This means it is more important than ever that the Government sticks to its plan to allow full reopening of venues on the 21 June.

“Expecting businesses to contribute to the scheme from the end of July is a worry, though. It will place unnecessary pressure on fragile businesses just as they are beginning to get back to their feet.

"It is also very disappointing not to have employer National Insurance contributions removed from the scheme. Businesses are burning through their cash reserves and many will have exhausted them before they have a chance to reopen. Not all businesses are going to be out of the traps instantly. It will take time for them to reopen and they will be racking up costs in the meantime."

Today's Budget has been billed as 'Judgement Day' for the hospitality sector, with pressure growing on Sunak to deliver a robust package of support to keep business afloat during the protracted third national lockdown.

According to CGA’s recently published Business Leaders’ Survey 2021, one in ten hospitality firms will not survive​ if no additional support is announced in the Chancellor’s Budget.

“It is now more important than ever that the Chancellor delivers a wider package of support in his Budget statement," adds Nicholls.

"Extended furlough alone will not be enough to give businesses the support they need to survive the Spring and Summer, particularly if businesses are now incurring additional costs. We must have an extension of the VAT cut and business rates holiday if we expect to see businesses survive and thrive after the crisis has passed.”

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