Furlough Extension Must Last As Long As Needed To Secure The Recovery

While full lockdown restrictions are set to last till at least the end of March, all eyes are on the annual budget announcement, today, that will set out what support is to be offered to both businesses and their employee, with the furlough scheme expected to be extended until September.

TUC General Secretary Frances O’Grady said:“Extending furlough is vital to protect jobs and businesses. The chancellor should have announced it earlier, and should now promise it will last as long as needed to secure the recovery.

“Reducing support to employers in July, just as restrictions end, will risk jobs. The job retention scheme should be available until at least the end of the year. And without specific support, the hardest-hit sectors – like hospitality, retail, the creative industries, travel and aviation - will struggle to reopen fully.

“More support for self-employed workers is long overdue, and we will scrutinise the details to make sure they are getting a fair deal.

“To make sure everyone can return to a decent job, ministers should promote training for those on furlough. The chancellor should also make sure all furloughed workers get at least the national minimum wage.

“Protecting existing jobs is only half the battle. The chancellor must now deliver a major programme of job creation in his Budget.”

James Andrews, personal finance expert at money.co.uk says: “Following several days of speculation and debate surrounding the future of furlough, the Chancellor has announced that the scheme is to be extended beyond April, up until the end of September 2021.

“But while workers will be able to receive the same amount of money all the way through to October, 80% of their wages up to £2,500 a month, it will start getting less generous for employers from the end of June, by which time lockdown restrictions are expected to be over.

“In July employers will be expected to contribute 10% of a furloughed employee’s wages for the hours they aren’t working, while in August and September that will rise to 20%.

“Bosses will also have to pay pension and National Insurance contributions for furloughed staff.

“Workers up and down the country have been hit financially by COVID-19 and although, for some, the 20% hit to pay-packs is manageable, for others it is more difficult. However, there are ways to help save money and manage budgets with less cash coming in.

“Keeping energy bills down through switching to a new tariff, and budgeting regular outgoings effectively will help those manage their finance on a reduced income. Additionally, banks have extended customers payment breaks, through schemes such as mortgage payment holidays and the credit card repayment freeze.

“If you are concerned about racking up accumulating larger debt, it is vital that you seek expert help. Free services such as Citizens Advice, or StepChange Debt Charity can help those struggling, manage debt.”

Money.co.uk has launched a dedicated guide to explain what the furlough changes mean for employers and employees; https://www.money.co.uk/guides/coronavirus-what-the-furlough-scheme-changes-mean-for-you

Kate Hindmarch, partner in Employment Law at Langleys Solicitors, said:

“While the extension of the furlough scheme is very welcome for many thousands of businesses and their employees, some employees now face the prospect of having been away from the workplace for 18 months. While the initial position of being off work on 80% pay might have been a novelty, employers may face real difficulties in reintegrating and reskilling their workforce.

“There will also be worries of rebuilding a sense of team within many businesses which are not suited to at-home working, or that have struggled to keep up a feeling of togetherness and morale during the almost 12 months of enforced working from home restrictions.

“The government's roadmap guarantees restrictions on leisure and hospitality are to stay in place until at least April, however the extension should go some way to securing jobs in these sectors. Our recent Back to Business? Report revealed that a third

of businesses are planning some form of restructuring to help them recover from the pandemic, and encouragingly, almost a third of businesses are planning to hire more people to help them recover from the effects of the last 12 months.

“Additionally, our research found 33% of businesses would also like to see a reduction or freeze of business rates, and the extension of the government's VAT reduction. Both of these schemes have enabled the retail and hospitality sectors, which were disproportionately affected by lockdown restrictions, to stay afloat while being forced to close their doors.

“There are still a number of months before restrictions ease further, and undoubtedly further hurdles for businesses to overcome during the pandemic, however with the additional government support many businesses will have a greater ability to adapt and thrive throughout the rest of the year.”

IoD Chief Economist Tej Parikh said:“Business leaders will breathe a sigh of relief that the furlough scheme has been extended further into the year.

“Many firms have tapped into the Job Retention Scheme to support their cashflow while restrictions have eaten into their revenues, and without it jobs losses would be even higher. By extending support until end-September, the Chancellor has also given many businesses an extra cushion as they attempt to rescale and rehire when the economy reopens.

“Widening the eligibility for self-employed income support is also welcome step, as many have gone without significant earnings for almost a year. Small company directors who have also been ineligible for Government support will also be hoping for provisions in the Budget.

“It is important the Chancellor builds on these announcements in the Budget, by extending more of the Government’s covid-19 economic support package beyond the spring, and by providing a stimulus to jumpstart business growth and investment.”

Dr Adam Marshall, Director-General of the BCC, said:

"The extension of the furlough scheme shows that the Chancellor has listened to our business communities. Many firms will be breathing a huge sigh of relief, particularly those businesses that are still closed or facing reduced demand due to Covid-19 restrictions. 

 “The furlough scheme has been a lifeline for companies all across the UK. This extension gives firms much more clarity on the way ahead, and will allow many to plan with greater optimism and confidence as they look to restart and rebuild over the coming months.”