Government to top up wages in new furlough plan
Rishi Sunak has outlined his plan to protect jobs and replace the furlough scheme
Last updated 23rd May 2022
Rishi Sunak has outlined his plans to protect UK jobs in the wake of the Covid-19 crisis.
The Chancellor has addressed the Commons after cancelling this year’s Budget.
With the furlough work scheme due to finish at the end of October, he announced that the government will top up a person's salary.
The Jobs Support Scheme
The replacement for the furlough scheme is the Jobs Support Scheme.
The main difference is that a worker will have to work for at least a third of their normal hours, which the employer will pay for.
The government and the employer will then top up two-thirds of the salary left, so if you work for a third of your normal hours, you'd get 77% of your normal salary with the government paying 22% of that.
It means workers won't be taking home full salaries but it's hoped struggling businesses will be able to afford to keep staff on rather than making them redundant.
This will be available to workplaces across the UK and is due to begin in November.
Chancellor of the Exchequer Rishi Sunak said the scheme will cover “two-thirds of the pay they have lost by reducing their working hours”.
He told the Commons: “The Jobs Support Scheme is built on three principles.
“First, it will support viable jobs. To make sure of that employees must work at least a third of their normal hours and be paid for that work as normal by their employer. The Government, together with employers, will then increase those people’s wages covering two-thirds of the pay they have lost by reducing their working hours, and the employee will keep their job.
“Second, we will target support at firms who need it the most. All small and medium-sized businesses are eligible but larger businesses only when their turnover has fallen through the crisis.
“Third, it will be open to employers across the United Kingdom, even if they have not previously used the furlough scheme.
“The scheme will run for six months starting in November and employers retaining furloughed staff on shorter hours can claim both the Jobs Support Scheme and the Jobs Retention bonus.”This new scheme will allow employers to bring back staff for at least a third of their normal hours.
Self-employed grant extended
The Chancellor extended the self-employment income support scheme and the 15% VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.
Helping businesses with cash-flow
Tax-deferrals and government-backed loans have been a 'lifeline' over the past six months, Mr. Sunak said.
Measures announced by Mr Sunak included:
– The new job support scheme, which will be targeted at small and medium-sized firms, with larger companies only eligible if turnover has fallen due to the crisis.
– The existing self-employed grant will be extended on similar terms and conditions as the new job support scheme.
– The temporary 15% VAT cut for tourism and hospitality will be extended until the end of March.
– A new payment scheme will give more breathing space for more than £30 billion of deferred VAT payments, allowing them to make 11 interest-free payments in 2021-22 rather than a lump sum at the end of March.
– A “pay as you grow” measure will extend the repayment terms for bounceback loans from six to 10 years.
– Firms which have taken out coronavirus business interruption loans will see the Government guarantee extended for up to 10 years.
– All loan schemes will be extended until the end of the year.Today he announced four further steps to help:
Rishi Sunak said it is “fundamentally wrong” to hold people in jobs that only exist inside the furlough scheme.
He told the Commons:
“Our economy is now likely to undergo a more permanent adjustment. The sources of our economic growth and the kinds of jobs we create will adapt and evolve to the new normal.
“And our plan needs to adapt and evolve in response. Above all, we need to face up to the trade offs and hard choices coronavirus presents and there has been no harder choice than to end the furlough scheme.
“The furlough was the right policy at the time we introduced it, it provided immediate short-term protection for millions of jobs through a period of acute crisis.
“But as the economy re-opens it is fundamentally wrong to hold people in jobs that only exist inside the furlough.”
The end of the furlough scheme
The furlough scheme was introduced by the government earlier in the year to help businesses keep staff in work and avoid mass redundancies
It has cost the Government £39.3 billion to date, with £3.9 billion between August 16 and September 20 alone, according to the latest figures released
Mr Sunak’s intervention comes after increasing pressure from business groups, MPs and unions to extend the furlough scheme amid fears the new restrictions will damage the economy.
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