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Furlough to be extended until September today — and could be cut to 60 per cent of wages
CHANCELLOR Rishi Sunak is set to announce an extension to the furlough scheme today - as it emerged 2 million people have now signed on.
He has been finalising details of tweaks to the taxpayer-funded job retention scheme, which is currently paying 6.5 million workers 80 per cent of their wages - up to a limit of £2,500 per month.
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The furlough scheme is due to expire in June but the Chancellor is expected to allow employers to furlough their staff part-time to help them ease themselves back to operation. But he is also set to to reduce the taxpayer-funded support down to 70 or even 60 per cent.
Mr Sunak, who will announce the changes in the Commons today, is expected to announce a temporary extension until September, but details had yet to be finalised last night.
The Chancellor will use the announcement to attempt to slow the alarming rate of people claiming Universal Credit.
Yesterday ministers revealed that the Government has now processed around two million Universal Credit claims since mid-March, when the lockdown was imposed.
Welfare Minister Will Quince told MPs yesterday that nine in ten Universal Credit applications will be paid “in full and on time” despite the huge surge in claims.
Yesterday Boris Johnson all-but confirmed yesterday that the scheme would be continued in some form beyond June.
'THEY WILL RECOVER'
He told MPs: “It has been one of the most assailant, the most important feature of this country’s response so far to this crisis - that we have looked after some of the lowest paid in our society, the hardest working people and we will continue to do so.”
Last night Mr Johnson promised most people in the hardest hit industries will get their jobs back – in defiance of dire predictions of mass job losses.
He insisted working class people were “our priority” but admitted the country would “have to think about our economy differently as we go forward”.
Asked by The Sun what message he would give to people who work in gyms, nightclubs and other leisure and hospitality jobs who are facing months off work, the PM said: “I do believe that they will recover.
“We have an ambition to get at least some hospitality going by July 4, that will be a tough ask, it will be hard to achieve and it depends on a great deal of conditionality that I’ve set out.
"But that’s the ambition, that’s the target that we’re setting, so at least some of the jobs will start to come back. And then over the medium term, I’ve absolutely no doubt that the UK economy is immensely resilient and will come back.
"But we’re going to have to think a lot more – if we can’t get a vaccine fast then we’re going to have to think a lot more how we make our businesses, our lives Covid-secure while continuing with economic activity.
"But we’re a very ingenious bunch, the Brits, I’m sure we’ll find ways forward, and that is what we intend to do.”
Mr Sunak was deluged with a flood of warnings over the future of the scheme.
The Resolution Foundation urged him to keep the scheme open longer for workers in the hardest hit sectors in order to acknowledge the Government’s roadmap revealed some sectors will have to stay shut for at least the rest of this year.
'SCHEME CAN'T LAST FOREVER'
It also wants the Government to allow partial furloughing from June onwards - enabling employees to return to work for some hours, while still receiving 80 per cent of their wages for the hours that they remained furloughed.
Currently the scheme requires furloughed employees not to be working at all in order to qualify for the scheme.
Resolution Foundation chief Torsten Bell said: “The scheme cannot last forever however. It should be phased out gradually, with a longer timeframe for the hardest-hit sectors.
“The Chancellor should also use the scheme to support the recovery by asking employers to contribute towards the wage costs of furloughs and allowing ‘partial furloughing’, with workers returning to work for some of the week, even if not all.
“The retention scheme could end up costing almost £50 billion. That’s a huge sum – but money well spent given the huge threat posed to our health, economy and living standards by this pandemic.
“This policy has made a huge difference in this crisis. It now needs careful and gradual change to ensure the benefits it has provided are secured rather than squandered.”
The Federation of Small Businesses have long-campaigned for employers to furlough staff part-time.
FSB boss Mike Cherry said last night: “The vast majority of small employers have furloughed staff and they’re telling us loud and clear that the ability to do so on a part-time basis as we move towards recovery will be key to keeping their operations afloat.
"For firms that don’t have the green light to open until July at the very earliest in particular, we need to see schemes extended significantly – not least the job retention scheme.”
Treasury Committee chairman Mel Stride suggested a "tapering down" of the furloughing scheme to protect jobs and ease the burden on the Exchequer.
He told MPs: "I just wanted to focus for a minute on how we might unwind the furlough scheme most productively and effectively.
"I think the first thing is that we should look at a tapering away of that particular measures from 80% down to 60% and 40% and so on to smooth our exit.
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"The second thing, I think this is particularly important, is that I think that employers should contribute something to the cost of furlough beyond the end of June.
"I say that because there will be many employers out there who currently have members of staff on furlough and are not having to pay them to be on furlough, and actually have no intention in the medium term at least of bringing them back into businesses.
"Thirdly, I think we need to make sure that we encourage part-time working within the furlough scheme where possible, and finally I think the Chancellor should look very carefully at targeting support and I say that not just in respect of furlough but also in respect of the other support that the Government is providing."
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Furloughed workers could return part-time as Chancellor looks to phase out scheme from next week
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