Chancellor Rishi Sunak extends furlough scheme until end of OCTOBER – but Gov will cut 80% rate from August

RISHI Sunak has revealed the government will extend the furlough scheme for FOUR months until the end of October but funding will be cut after July.

The Chancellor announced in the House of Commons today that changes to the unprecedented job-retention scheme would begin from August.

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The furlough scheme was due to end in June before today's extension, and Mr Sunak said businesses will be expected to start chipping in to help tackle the huge burden on the taxpayer from August.

The ONS estimates it's costing around £8billion a month - and the Chancellor said the scheme would continue unchanged until the end of July.

It is currently paying 80 per cent of people's wages - up to a limit of £2,500 per month.

Full details on the scheme will be released before the end of May, Mr Sunak said.

Paul Johnson, head of the Institute for Fiscal Studies, said the cost was "staggering" and was likely to reach £80billion in total.

"It is huge, it’s more than any government spending other than the health service or welfare," he added.

But already employers and Labour warned that there could be "mass redundancies" if employers had to fork out huge sums upfront to keep their workers on.

Shadow Chancellor Annelise Dodds said: "The government must clarify today when employers will be required to start making contributions, and how much they’ll be asked to pay.

"If every business is suddenly required to make a substantial contribution from the 1st August onwards, there is a very real risk that we will see mass redundancies."

Treasury insiders suggested that the Government would still pay at least half of the 80 per cent wage bill, but did not give a specific figure of how the funds would be divided.

New statistics published today revealed the job-retention scheme has protected 7.5 million workers and almost one million businesses.

Speaking in the House of Commons today on his 40th birthday, Mr Sunak said: "Until the end of July there will be no changes whatsoever.

"Then from August to October, the scheme will continue for all sectors and regions of the UK but with greater flexibility to support the transition back to work.

"As we reopen the economy we need to support people back to work.

"Between August and October, the scheme will continue but with greater flexibility to support people back to work.

"We will share the cost of paying people's salaries."

He added: "Full details will follow by the end of May, but I want to assure people today of one thing that won't change.

"Workers will through the combined efforts of Government and employers continue to receive the same level of overall support as they do now at 80 per cent of their current salary up to £2,500 a month."

The scheme will continue throughout the four nations - even though Scotland, Wales and Northern Ireland are not telling people to go back to work yet.

All sectors will be able to get help, the Chancellor promised, not just those who desperately need assistance.

One option discussed was that furlough money would be reduced to 60 per cent after fears that workers were "addicted" to the scheme, but Mr Sunak denied having used the phrase himself.

Mr Sunak said: "Employers currently using the scheme will be able to bring furloughed employees back part-time.

"Our message is simple: we stood behind Britain's workers and businesses, and we will stand behind them as we come out of it.

"Nobody who is on the furlough scheme wants to be on this scheme.

"People up and down this country believe in the dignity of their work, going to work, providing for their families, it's not their fault their business has been asked to close or asked to stay at home."

Employers will have to promise to top up the rest of the workers' wages to 80 per cent to continue to take part in the scheme, it was clarified by officials today.

They wont't be able to just give workers 40 per cent of their wages from the Government and not contribute anything to the rest

It comes after Prime Minister Boris Johnson yesterday published a 50-page guide on getting Britain out of lockdown.

The PM gave a speech on Sunday night and followed up with a three-step plan to ease lockdown measures.

Starting this week, those who can't work from home were encouraged to get back to work.

The Government will also explore ways to support furloughed workers who wish to do additional training or learn new skills during this period.

Federation of Small Business chairman, Mike Cherry said: "We await further detail on the contributions that will be required of small employers after July.

"We need to ensure that those obligations are affordable for the many businesses that have had no revenue coming in for months now, but still have fixed overheads to worry about."

And Professor Len Shackleton, IEA Editorial and Research Fellow, added: "The longer businesses are dependent on the furlough scheme, and unable to begin reorganising staff and adjusting their business models, the less likely it is that people will have jobs to return to once the lockdown ends.

"It will also delay individuals' plans to seek other jobs where this is clearly going to be necessary.

"It would have been better to spell out much more clearly what the government intends now, rather than delaying the detail of what Mr Sunak proposes."

BCC Director General Adam Marshall warned: "Over the coming months, the Government should continue to listen to business and evolve the scheme in line with what’s happening on the ground.

"Further support may yet be needed for companies who are unable to operate for an extended period, or those who face reduced capacity or demand due to ongoing restrictions."

TUC General Secretary Frances O’Grady welcomed today's news and said it was good for workers.

She said: "We are pleased ministers have listened to unions and extended the job retention scheme to the autumn. This will be a big relief for millions.

"Changing the rules to allow part-time working is key to enabling a gradual and safe return to work.

";And maintaining the rate at 80 per cent is a win for the pay packets of working families.

"As the economic consequences of Covid-19 become clear, unions will keep pushing for a job guarantee scheme to make sure everyone has a decent job."