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Furlough scheme: Rishi Sunak expected to ask employers to pay 20% of staff wages
RISHI Sunak is expected to ask employers to pay 20 per cent of their staff's wage bills from August.
The Chancellor will today outline details of the furlough scheme and how it will change in the next few months to help get Britain back to work.
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At the moment the Government is paying 80 per cent wages of 8.4million people up to £2,500 per month, but Prime Minister Boris Johnson wants people to start to return to work if they can.
The Chancellor also wants to wind down the scheme over the next few months and encourage more people back to the office.
But in the next few months the Government part will reduce down to 60 per cent, and it's expected that employers will be mandated to pay 20 per cent, or 40 per cent if they were topping up wages to their full amount.
Experts fear that two million jobs could be lost from August onwards as employers decide they can't, or won't, pay the extra.
Nearly one in four firms say they cannot afford to top-up furloughed workers’ salaries - in a chilling sign of how many more jobs could be lost.
How does the furlough scheme work?
ANY UK organisation with employees can apply, including businesses, charities, recruitment agencies and public authorities.
It’s up to your place of work to apply to the scheme, meaning you won’t need to contact the government yourself.
To access the scheme, your employer must comply with the following:
- Designate employees who cannot do their jobs due to the coronavirus measures put in place by the government
- Notify those employees of their new “furloughed” status
- Submit information to HMRC about furloughed employees to set up a system for reimbursement and about existing systems that will facilitate payments
To be furloughed, you must have been on a payroll on March 19.
Workers can ask previous employers to rehire and furlough them, even if they left for another job, but firms don’t have to do this.
A survey of almost 700 company directors found that about half of those using the scheme said they could provide 20 per cent or more towards furloughed workers' full-time salaries between August and October.
Mr Sunak has said he will extend furlough until October, and will give the ability for some workers to do it part-time.
He is also expected to ask employers to pay national insurance and pension contributions too.
The measures are expected to apply to all sectors, but the Government has been urged to tailor its support to certain industries, like the hospitality sector.
The Chancellor could also ban new people from being furloughed in future, it was reported this week.
However, fresh analysis from the Institute for Government said today that Britain had done more to keep employees in work than in other countries.
15 per cent of people are claiming Universal Credit after a huge spike in applications during the pandemic.
The ballooning cost of the scheme is set to reach around £80billion, financial analysts have predicted.
The scheme, which pays 80 per cent of people's wages up to a total of £2,500, is thought to have cost around £15billion so far.
Environment Secretary George Eustice has said people cannot be furloughed "indefinitely" and ways need to be found to get people safely back to work.
Asked on Sky News whether there will be continued support for the self-employed, Mr Eustice said: "Well obviously it is nearly a month ago now that we said we wanted to reopen those bits of the economy that couldn't work from home, so we've been encouraging the construction industry for instance to get back to work.
"A lot of those self-employed professions such as plumbers, electricians and so on, those people are able to return to work now, albeit observing social distancing, but we need to try to start to get bits of the economy back to work.
"Now I don't know what Rishi Sunak, the Chancellor, will say later in terms of self-employed and the furlough scheme for them, but I think there is a general overarching message here that we've had a very generous furlough scheme in place to help people through these extraordinary times and to ensure that businesses' overheads could be covered."
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Paul Johnson, head of the Institute for Fiscal Studies, told The Times there would be some job losses on the cards.
He said: “It’s important to encourage employers to get employees back to work where they can.
“Where they can never get people back to work there is a cost of continuing to subsidise jobs that no longer exist. We need to start shaking out jobs that are gone.
“Make it too generous and you are in danger of slowing down the recovery by keeping people in non-existent jobs. Make it not generous enough and you are in danger of forcing people out of jobs that do have a long-term future.”
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