How will the furlough scheme changes affect me?
THE government is paying the wages of 6.3million workers through its coronavirus furlough scheme - but Rishi Sunak has now begun outlining plans on how to "wind [it] down".
The Chancellor is expected to announce a string of changes to the Coronavirus Job Retention Scheme next week, that would come into effect after June.
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Mr Sunak told ITV the government would end up spending as much on furloughed employees as it does on the NHS if there were no changes.
He said: "Clearly that is not a sustainable situation which is why, as soon as the time is right, we want to get people back to work and the economy fired up again."
Mr Sunak is certain there will be no "cliff edge" ending to the scheme, which MPs fear would trigger mass redundancies.
But giving firms a heads up about the changes by the end of next week is crucial because employers who are planning to make staff redundant in July must give 45 days notice. The deadline for this is May 18.
Here, we outline some of the options being explored by the government and how they could affect you:
What is furlough?
THE aim of the government’s job retention scheme is to save one million workers from becoming unemployed due to the lockdown.
Under the scheme, the government will pay 80 per cent – up to £2,500 a month – of wages of an employee who can’t work because of the impact of coronavirus.
Workers will be kept on the payroll rather than being laid off.
The government will pay the associated employer national insurance contributions and minimum automatic enrolment employer pension contributions on top.
The scheme has been extended to run until the end of June and can be backdated to March 1 2020.
It’s available to all employees that started a PAYE payroll scheme on or before March 1, 2020.
If you’re between jobs, have started at a new place of work or were made redundant after this date then you can ask your former employer to rehire you to be eligible for the scheme.
Employers can choose to top up furloughed workers’ salaries by the remaining 20 per cent but they don’t have to.
Firms who want to access the scheme will need to speak to their employees before putting them on furlough.
While on furlough, staff should not undertake any work for their employer during the scheme.
1. Slashing the rate to 60 per cent of salaries
One of the options being explored is reducing the government subsidy to 60 per cent of furloughed workers' salaries.
Currently, furloughed workers are paid 80 per cent of their wages, up to £2,500 a month, by the government.
If that rate dropped by a further 20 per cent, it could see £625 wiped off the monthly threshold, bringing the maximum amount that the government will pay down to £1,875 a month.
For some workers, earning just 60 per cent of their wages isn't sustainable.
For example, if you're normally paid £1,500 a month, the government will be pay £1,200 of it under current furlough rules.
But this would drop to £900 if the rate was slashed further.
The rate could then be reduced even further over the coming months to encourage people to look for new jobs to boost their income.
Employers are encouraged to top up furloughed workers' salaries to 100 per cent but it's not a legal requirement.
2. Allowing furloughed staff to work
Currently, furloughed staff aren't allowed to work for their employer, or even undergo training for them if it makes the company money.
But another option the government is exploring is letting furloughed staff work part-time for their employer but the subsidy would be less.
This would help companies that have suffered under lockdown to get back on their feet by allowing them to ease into paying 100 per cent of the salaries of those on the payroll.
A similar plan has been devised by French President Emmanuel Macron, which helps shops and other businesses that cannot operate at full capacity because of social distancing measures and do not need staff full-time.
But the Treasury has warned that designing a part-time furlough scheme would be much harder to administer.
3. Only furloughing the poorest employees
The Sun exclusively revealed that Mr Sunak is also looking into the viability of only offering the government subsidy to the most financially desperate workers.
In this instance, the Treasury would issue a specific criteria that workers would have to fulfil before being eligible for furlough.
Who can be furloughed?
ANY UK employer can apply for the furlough scheme, including business, charities, recruitment agencies and public authorities.
Employers as varied as and Premier League clubs Newcastle and Tottenham have already furloughed some of their workers.
However the government does not envisage making significant payouts to public sector employees as they believe most will continue offering essential services.
Where employers are receiving public funding for staff costs, they will be expected to continue using these funds to pay staff rather than applying for the furlough scheme.
If you are working at reduced hours and pay, you will not be eligible for furlough and it will be up to your employer to pay you as normal.
You must have created and started a PAYE payroll scheme on or before March 1, 2020 and have a UK bank account.
Tenants are less protected than homeowners, who are eligible for mortgage holidays.
Although tenants can only apply for rental deferrals, landlords are not obliged to comply, while the move would also help prevent them being evicted due to unpaid rent.
4. Only furloughing staff in their 20s and 30s
Workers in their 20s and 30s are much more likely to be renters than homeowners and as a result, more likely to fall into the "poorest workers" category outlined above.
By only opening the financial help to certain age groups could help young employees stay attached to their current jobs and boost future prospects in the workforce.
5. Only furloughing jobs that are "vital to protect"
The Treasury is reportedly looking only opening the scheme to workers in certain industries where it is deemed "vital" to protect their jobs.
This would help businesses in industries that are likely to to be closed longer term, such as pubs, restaurants, hotels and the tourism industry.
But industry experts warned that this would cause problems for small businesses that don’t fit into one sector.
Federation of Small Businesses chief Mike Cherry warned: “Government must avoid applying a sector straightjacket that doesn’t work for small firms – there are far too many businesses who don’t fit neatly into one box who will need time to get back up and running – like small companies that mainly supply to hotels but aren’t hospitality businesses.”
What if I'm no longer eligible for furlough?
If furlough isn't possible for you and you're struggling to make ends meet, then you may be able to get help from Universal Credit.
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You can also ask your bank for a three month mortgage holiday, or breathing space from your credit card or loan provider if you can't make the repayments due to coronavirus.
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Another alternative to consider is applying for one of the 70,000 new jobs that have been created because of the impact of Covid-19.
Amazon, Asda, Aldi, Lidl and Deliveroo are among just some of the employers who are taking on more staff.