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Rishi Sunak extends furlough scheme till end of March and increases support to self-employed

Written by Latifa Yedroudj on Tuesday, 10 November 2020. Posted in Politics, Analysis

The furlough scheme, which helps pay up to 80% of workers’ wages, will now be extended until March 31, the Chancellor has confirmed

Rishi Sunak extends furlough scheme till end of March and increases support to self-employed

Rishi Sunak extends furlough scheme till end of March and increases support to self-employed

The furlough scheme, which helps pay up to 80% of workers’ wages, will now be extended until March 31, the Chancellor has confirmed  

Thousands of businesses across the UK have shut down after the government announced a nationwide lockdown in October. On November 5, Chancellor Rishi Sunak confirmed the UK’s furlough scheme will extend until the end of March, protecting millions of jobs and providing support to businesses during these harsh winter months. 

The furlough scheme, also known as The Coronavirus Job Retention Scheme (CJRS), subsidises the wages of people who cannot do their jobs either because their workplace is closed or because there is no longer work for them during the pandemic. The revised furlough scheme replaces the earlier Job Support Scheme, which was originally planned to last until December 2. Now, Rishi Sunak announced the Coronavirus Job Retention Scheme will be extended until March 31, which allows furlough employees to receive 80% of their current salary for hours not worked up to a maximum of £2500 per month. The government expects the furlough extension to benefit 200,000 workers who have previously missed out on the scheme.

The chancellor also announced billions of pounds of support to the UK workforce. The Self-Employment Income Support Scheme (SEISS) will now be increased, with the third grant covering November to January calculated at 80% of average trading profits, up to a maximum of £7,500. Many workers will remain eligible for help, including the newly self-employed and those who pay themselves dividends, freelancers, and sole traders who previously had a trading profit of more than £50,000.  

The chancellor also raised guaranteed funding for the UK’s devolved administrations from £14 billion to £16 billion. This uplift will continue to support workers, business and individuals in Scotland, Wales and Northern Ireland. On top of this, the government announced cash grants of up to £3,000 per month for businesses which are closed worth more than £1 billion every month. Mr Sunak also announced plans to extend existing government-backed loan schemes and the Future Fund untill the end of January, along with the ability to top-up Bounce Back Loans. 

In his speech on November 5, The Chancellor of the Exchequer Rishi Sunak said: “I’ve always said I would do whatever it takes to protect jobs and livelihoods across the UK - and that has meant adapting our support as the path of the virus has changed. It’s clear the economic effects are much longer lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support. Extending furlough and increasing our support for the self-employed will protect millions of jobs and give people and businesses the certainty they need over what will be a difficult winter.” 

Business leaders have praised the Chancellor for extending the furlough scheme, which will provide much-needed help to thousands of businesses across the country, some of which are on the brink of shutting down. Lee Biggins, founder and CEO of CV-Library said: "While this funding is long overdue, we are thrilled to see that the government understands that employers across the country, including in the devolved nations, will need financial support past the end of this latest national lockdown. This decisive action offers more long-term certainty than we've seen in recent months, which will be essential for lasting recovery. This additional support offers a glimmer of hope for businesses on the brink of bankruptcy, as well as a life-line for some of the country's most vulnerable workers. We applaud the government on their decision to protect the hard-working people of this country." 

Nigel Morris, employment tax director at MHA MacIntyre Hudson, says this move provides much-needed clarity in uncertain times. “A UK wide furlough scheme with a fixed end-date and the flexibility to manage local and regional restrictions will be a real help for business drawing up their budgets,” he said. “Companies now know what they need to pay out in NIC and pension costs over the coming months. The fact the Job Retention Bonus (JRB) and Job Support Scheme (JSS) have been deferred also provides additional clarity; businesses no longer face the prospect of grappling with a whole new set of rules, or the admin juggling act of using multiple support schemes. There may still be some uncertainty and changes to come, particularly if the review the Chancellor mentioned for January results in a reduction from 80% of employee wages paid by the Treasury to say 70% or 60%. However, overall today’s announcement cuts the number of scenarios to consider and provides a basis for much needed planning on the best way to survive.” 

As part of the month-long restrictions in England, pubs, restaurants, gums and non-essential shops all remain shut until December. However, the furlough scheme will be run until the end of March, increasing speculations that lockdown could be extended further than the initial December end date. “The extension of the furlough scheme is, of course, very welcome news for the hospitality industry. However, I can’t help but feel it’s somewhat ominous. Does this mean that lockdown will be extended beyond 2nd December? I suspect so,” Jane Pendlebury, the CEO of HOSPA, the Hospitality Professionals Association said. As a sector, we’ve been incredibly grateful for the support we’ve received from the Government. It’s served to keep many of us going through the most challenging of times. But, despite this support, there are many previously viable businesses that have had to shut their doors for good. So, whilst we welcome the latest round of measures as a good thing, if lockdown is extended again there will inevitably be many more businesses that go under. It goes without saying that, of course, we recognise the need to do whatever is necessary to counteract the virus and save lives, but the gradual disintegration of the hospitality industry, as venues survive one period of lockdown, but not the next, will have a huge knock-on effect. Hundreds of thousands of people’s livelihoods hinge on hospitality, and there is only so long that they can hold on.”   

The extension to the furlough scheme will help thousands of businesses and workers get through these harsh winter months during the lockdown. The scheme, which was initially due to end on December 2, has raised criticism it should have been implemented much earlier to help struggling firms. Shadow chancellor Anneliese Dodds accused Mr Sunak of ignoring objections to the government's measures "until the last possible moment".

About the Author

Latifa Yedroudj

Latifa Yedroudj

Latifa Yedroudj has joined the Elite team to fully immerse herself in the business side of journalism, a strong passion of hers cultivated from young having co-run her mother's start up business since she was 18. Her interests lie in a wide range of subjects, including start ups, business, travel, and anything entrepreneurial she can get her hands on. She has worked for some of the biggest names in journalism including The Guardian and The Mirror. Follow her on @latifayed on Twitter for her latest journo rants.

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