The UK furlough
scheme, launched in March, will be extended for another four more months to
prevent an unprecedented wave of job losses
UK’s small and medium businesses are struggling to stay afloat during the coronavirus pandemic as thousands of employees self-isolate at home and many are currently on furlough. The government has now taken extra steps to retain the workforce and protect Britain’s employees. Chancellor Rishi Sunak has announced UK’s furlough scheme will be extended until the end of October in a bid to prevent rising job losses in the summer.
The Job Retention Scheme used to pay workers on leave due to coronavirus has been extended for another four months until October, it has been announced on Tuesday evening. Over 7.5 million workers in Britain are currently on furlough with 80% of their wages paid for by the government, and the total scheme could amount to more than £80 billion. Despite its staggering costs, Chancellor Rish Sunak insisted the scheme will continue to run however companies must “start sharing the paying of salaries by August. Almost half of UK businesses are currently relying on the scheme, and 62% of SMEs are using or planning to use the scheme to help them during this difficult time, a study by Sage PLC has revealed. According to Sage’s ‘SME Tracker’, out of those using the scheme, 70% have furloughed more than half of their staff and 34% believe the furlough is the most important measure to help them get through the next few months. “Over a third of SMEs have told us that the extension of the furlough scheme will be the single most important measure to help them get through the next few months, and almost half are already making use of it to pay their people,” Sabby Gill, Managing Director of UK&I, Sage PLC said. “A large part of the UK private sector – and its employees – are leaning heavily on this system and it is right not to pull the rug from under their feet.
“However, first and foremost SMEs are after flexibility. We are seeing a clear preference for an extension to the scheme that allows them to return employees gradually, at reduced hours or after shorter furlough periods. Whilst the adjustment addresses that from August onwards, we expect many SMEs that are resuming a level of operations will be looking to bring back workers part-time before August. 44% still expect their business to make less than 50% its normal level of sales despite the new government guidance on getting back to work. Therefore, some may struggle to pay full-time salaries as we enter the next phase.”
Ms Gill added: “The focus, therefore, must now turn to how we can stimulate demand enough to enable SMEs to pick up the baton again. Unfortunately, the lifting of lockdown doesn’t offer a light at the end of the tunnel for small businesses. 44% say that even after the implementation of the government’s new guidelines they expect to be making less than half their normal level of sales, reflecting widespread concern about the longer-term demand picture and a real need for sustained and carefully tailored further support.”
There will be greater flexibility for employers to bring staff back to work as the lockdown eases over the next few months, Chancellor Sunak said. The Job Retention scheme has been extended in a bid to prevent further job losses in oncoming months after thousands of Britons have been let go from their roles due to the coronavirus outbreak. The announcement came just ahead of this weekend’s deadline as several firms have already been preparing to start redundancy consultations for job losses at the end of June. The UK’s furlough scheme comes as a “lifeline for millions”, the shadow chancellor, Annaliese Dodds said.
Chancellor Sunak told the BBC: “We already know that many people have lost their jobs, and it breaks my heart. We’ve seen what’s happening with universal credit claims already. This is not something that we’re going to wait to see; it’s already happening.”
He added: “There are already businesses that are shutting. There are already people who have lost their jobs. And as I said, that’s heartbreaking to me and that’s why I’m working night and day to limit the amount of job losses.”
There have been rising concerns over the cost of the furlough scheme. However, the scheme has been vital for thousands of SME employees who fear to lose their jobs during the coronavirus outbreak. The government is now preparing to further extend the support package for the self-employed “if necessary”, a scheme which was launched in May, and a further update on this will be announced on Wednesday.
Chancellor Sunak added: “I am extending this scheme because I won’t give up on the people that rely on it. We stood behind Britain’s workers as we came into this crisis, and we will stand behind them as we come through the other side.”
