The government’s Coronavirus Job Retention Scheme has been extended one month to 30 June, the chancellor has announced.
The extension follows warnings from industry earlier this week that any company wanting to make 100 or more people redundant after the furlough scheme was scheduled to end on 31 May, would have to commence the necessary 45-day consultation tomorrow.
Ending the scheme on 31 May would have effectively put businesses in a tricky position: either bring employees back to work even if suppliers and customers are still shut down and shoulder the salary costs, or make furloughed employees redundant” – Phil Pepper, Shakespeare Martineau
The scheme, which allows organisations to furlough employees with the government providing cash grants of 80% of their wages up to a maximum of £2,500, was originally available for three months and backdated from the 1 March.
Rishi Sunak said: “We’ve taken unprecedented action to support jobs and businesses through this period of uncertainty, including the UK-wide Job Retention Scheme. With the extension of the coronavirus lockdown measures yesterday, it is the right decision to extend the furlough scheme for a month to the end of June to provide clarity.
“It is vital for people’s livelihoods that the UK economy gets up and running again when it is safe to do so, and I will continue to review the scheme so it is supporting our recovery.”
He added that he would keep the furlough scheme under review and extend it further if necessary.
Angela McGowan, the CBI’s Northern Ireland director, said: “The Chancellor’s welcome extension of the job retention scheme until the end of June will help protect the economy and prevent unnecessary job losses through this new lockdown phase. The government deserves credit for showing agility in the face of unprecedented challenges.
“No firm wants the scheme to last for longer than it needs to, but it’s absolutely clear that these vital support systems must stay in place until it’s safe for people to return to work and we can begin to restart and revive our economy.”
Edwin Morgan, director of policy at the Institute of Directors, said: “This move will be welcomed by employers across the country, and comes just in the nick of time.
“The furlough scheme is a lynchpin of the government’s economic support, and has brought relief to many businesses and employees. When the portal opens on Monday, it’s crucial the system is as straightforward as possible. We’ll be working to ensure as many firms can access the support as need it.
“With the lockdown extended, it’s now even more important that we look to fix any problems in the system. At present, countless directors of small companies are hamstrung if they need to furlough themselves, receiving little income support and barred from doing the things that could see their organisation and staff through the crisis. This needs sorting out quickly.
Furlough scheme extension
“Looking further ahead, when restrictions begin to lift, government may need to explore a tapered approach as the economy returns to more normal circumstances.”
HM Treasury said that the extension reflected yesterday’s announcement extending social distancing measures for a further three weeks.
It added that future decisions on the scheme will take into account further developments on the wider measures to reduce the spread of coronavirus, as well as the “responsible management of the public finances”.
Phil Pepper, head of employment at Shakespeare Martineau, said: “By allowing companies to continue furloughing their employees until the end of June, the government has saved many businesses from having to consider starting redundancy processes, which are often painful and tricky to manage.
“Curbing job cuts has been at the heart of the government’s Covid-19 plans so far and it seems that this approach is set to continue. Ending the scheme on 31 May would have effectively put businesses in a tricky position: either bring employees back to work even if suppliers and customers are still shut down and shoulder the salary costs, or make furloughed employees redundant. This extension is the best and most logical approach and will be a welcome lifeline for many UK companies.”
TUC general secretary Frances O’Grady said: “This is very welcome news for workers and their families… Employers must continue to make full use of the scheme to furlough workers and protect jobs. There is no reason to make any staff redundant.”
The government portal for the Coronavirus Job Retention Scheme opens on Monday 20 April.