FURLOUGH BLOW
Furlough cash could be cut by as much as £625 a month to 60% of wages as Chancellor warns scheme must ‘wind down’
RISHI Sunak has begun detailed planning on how to "wind down" the Government's subsidised furlough scheme without causing a "cliff edge".
One of the options being considered by the Chancellor is cutting the wage subsidy down to 60 per cent - as much as £625 a month - to encourage people to look for new jobs.
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The scheme could then be reduced even further over coming months, according to
Another option being looked at is to allow some furloughed staff to work, but with a smaller subsidy from the public purse.
It would follow a similar plan 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.
It comes as:
- The UK officially becomes the country with the worst death toll in Europe - with 29,648 deaths
- Fears grow over employers discriminating on workers who have antibodies for the virus.
- Headteachers worry it may be unsafe for children to head back to schools in June
- It was revealed 18 million people were let into the UK in midst of the crisis with no screening.
So far 6.3 million people have been furloughed because of the economic shutdown caused by coronavirus - at a staggering cost of £8billion.
Furloughed workers currently have 80 per cent of their wage subsidised up to £2,500 a month.
The scheme will continue until the end of June.
Overall, 27 million people are having their wages, pension, furlough or Universal Credit paid for by the state - which adds up to more than half of all adult Brits.
But the Chancellor has said he aims to "wind down" the scheme gradually over the next few months, stressing the state can't pay everyone's wages for ever.
He has been clear there will be no "cliff edge", which MPs fear would trigger mass redundancies.
The Treasury is expected to make crucial calls on the subsidy scheme this week, ahead of Boris Johnson's announcement on Sunday to lay out a blueprint to ease restrictions.
A Government source said: “We are going to see a winding-down of the scheme and people being eased back to work gently.
“What that will look like is the subject of discussions this week and the details are still being looked at by the Treasury.
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."
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.
Labour leader Sir Keir Starmer agreed the scheme could not "go on infinitely" and urged the Chancellor to create a category of "semi-furloughed" people who can work part time, and to grant an extension to businesses which could stay closed for months - such as pubs and restaurants.
The cost of the scheme was nearly twice as high as the estimates from last month, with 800,000 employers putting their staff on furlough.
Defence Secretary Ben Wallace said: “It’s a good scheme. But at the end of the day we have got to get our economy back up and running and we’ve got to try and encourage as many people back to the workplace.”
Health Secretary Matt Hancock said: “We obviously need to get people safely back to work so we can withdraw from that scheme.
"It’s been very successful at keeping jobs and firms alive ... we also need to wean people off it.”
British Airways announced they would be making 12,000 people redundant, despite putting 30,000 of its 42,000 employees on furlough - triggering redundancy fears within the Government.
Another option - to end furloughing sector by sector as more areas of the economy are released - was rejected over concerns of creating a cliff-edge for some workers but not others.
A spokesman for No10 said: "You heard from the Chancellor last night where he said he was working on the most effective way to wind down the scheme and ease people back into work.
"Ultimately we do need to make sure we can get our economy fired up and people get back to work."
Treasury sources did not comment on the specifics of the scheme.
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The UK coronavirus death toll has passed 29,000 as 366 patients die in hospital in England but true figure is much higher