The furlough scheme to support workers through the coronavirus crisis is being extended to the end of October, but employers will be asked to bear a share of the cost of paying staff up to 80 per cent of wages while they are not working, chancellor Rishi Sunak has told the House of Commons.
Mr Sunak said that additional flexibility will be built into the scheme to allow a part-time return to work over the summer, but the Treasury is not planning to reveal precise details of how this will work and how much employers will have to pay until the end of May.
It raises the prospect that businesses like pubs and nightclubs could be told to contribute towards staff salaries despite being barred by the government from opening for business.
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Labour demanded immediate clarity on the cost to employers, warning of the danger of mass redundancies at the start of August if they are suddenly required to pay substantial sums to keep on workers who they would otherwise have laid off during the lockdown.
Mr Sunak said that the job retention scheme had been a “world-leading economic intervention”, supporting 7.5 million jobs in almost 1 million businesses with payments totalling £10 billion so far.
The scheme had been due to be wound down after four months in operation at the end of June, and today’s announcement means employers will not be forced this week to send out mass redundancy notices for that date.
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Staff react outside Salford Royal Hospital in Manchester during a minute’s silence to pay tribute to the NHS staff and key workers who have died during the coronavirus outbreak
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Staff inside Camberwell bus depot in London, during a minute’s silence
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NHS staff at the Mater hospital in Belfast, during a minute’s silence to pay tribute to the NHS staff and key workers who have died during the coronavirus outbreak.
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Shoppers observe a minute’s silence in Tescos in Shoreham
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Firefighters outside Godstone fire station
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6/30 Salford Royal Hospital
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7/30 Salford Royal Hospital
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Hospital workers take part in a protest calling on the British government to provide PPE across Britain for all workers in care, the NHS and other vital public services after a nationwide minute’s silence at University College Hospital in London
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A school children’s poster hanging outside Glenfield Hospital during a minute’s silence
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A man holds a placard that reads “People’s health before profit” outside St Thomas hospital
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Staff members applaud outside the Royal Derby Hospital, following a minute’s silence
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Cabinet Secretary Mark Sedwill, Prime minister Boris Johnson and Chancellor of the Exchequer Rishi Sunak, stand inside 10 Downing Street, London, to observe a minutes silence in tribute to the NHS staff and key workers who have died during the coronavirus outbreak
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13/30 University College Hospital, London
Hospital workers hold placards with the names of their colleagues who have died from coronavirus as they take part in a protest calling on the British government to provide PPE
AP
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Staff at Waterloo Station in London, stand to observe a minute’s silence, to pay tribute to NHS and key workers who have died with coronavirus
AP
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Medical staff at the Louisa Jordan hospital stand during a UK wide minutes silence to commemorate the key workers who have died with coronavirus in Glasgow
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An NHS worker observes a minute’s silence at Chelsea and Westminster Hospital
Reuters
17/30 Chelsea and Westminster Hospital in London
AFP via Getty
18/30 Belfast, Northern Ireland
NHS staff observe a minutes silence at Mater Infirmorum Hospital
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NHS workers hold a minute’s silence outside the main entrance of Derriford Hospital
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NHS Frimley Park Hospital staff at the A&E department observe a minute’s silence
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21/30 Mater Infirmorum Hospital
People applaud after a minutes silence in honour of key workers
Reuters
22/30 Waterloo Station, London
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Wreaths laid outside Sheffield town hall
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A group of trade unionists and supporters standing outside Sheffield town hall
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First Minister Nicola Sturgeon stands outside St Andrew’s House in Edinburgh to observe a minute’s silence in tribute to the NHS staff and key workers who have died during the coronavirus outbreak
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Staff stand outside the Royal Derby Hospital, during a minutes silence
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Police officers observe a minutes silence at Guy’s Hospital
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A woman standing outside Sheffield town hall
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29/30 Royal Derby Hospital
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NHS workers during a minute’s silence outside Glenfield Hospital
Getty
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Staff react outside Salford Royal Hospital in Manchester during a minute’s silence to pay tribute to the NHS staff and key workers who have died during the coronavirus outbreak
PA
2/30
Staff inside Camberwell bus depot in London, during a minute’s silence
PA
3/30
NHS staff at the Mater hospital in Belfast, during a minute’s silence to pay tribute to the NHS staff and key workers who have died during the coronavirus outbreak.
PA
4/30
Shoppers observe a minute’s silence in Tescos in Shoreham
Getty
5/30
Firefighters outside Godstone fire station
PA
6/30 Salford Royal Hospital
Getty
7/30 Salford Royal Hospital
PA
8/30
Hospital workers take part in a protest calling on the British government to provide PPE across Britain for all workers in care, the NHS and other vital public services after a nationwide minute’s silence at University College Hospital in London
AP
9/30
A school children’s poster hanging outside Glenfield Hospital during a minute’s silence
Getty
10/30
A man holds a placard that reads “People’s health before profit” outside St Thomas hospital
Getty
11/30
Staff members applaud outside the Royal Derby Hospital, following a minute’s silence
PA
12/30
Cabinet Secretary Mark Sedwill, Prime minister Boris Johnson and Chancellor of the Exchequer Rishi Sunak, stand inside 10 Downing Street, London, to observe a minutes silence in tribute to the NHS staff and key workers who have died during the coronavirus outbreak
PA
13/30 University College Hospital, London
Hospital workers hold placards with the names of their colleagues who have died from coronavirus as they take part in a protest calling on the British government to provide PPE
AP
14/30
Staff at Waterloo Station in London, stand to observe a minute’s silence, to pay tribute to NHS and key workers who have died with coronavirus
AP
15/30
Medical staff at the Louisa Jordan hospital stand during a UK wide minutes silence to commemorate the key workers who have died with coronavirus in Glasgow
Getty
16/30 London
An NHS worker observes a minute’s silence at Chelsea and Westminster Hospital
Reuters
17/30 Chelsea and Westminster Hospital in London
AFP via Getty
18/30 Belfast, Northern Ireland
NHS staff observe a minutes silence at Mater Infirmorum Hospital
Reuters
19/30 Plymouth
NHS workers hold a minute’s silence outside the main entrance of Derriford Hospital
Getty
20/30
NHS Frimley Park Hospital staff at the A&E department observe a minute’s silence
Getty
21/30 Mater Infirmorum Hospital
People applaud after a minutes silence in honour of key workers
Reuters
22/30 Waterloo Station, London
AP
23/30
Wreaths laid outside Sheffield town hall
PA
24/30
A group of trade unionists and supporters standing outside Sheffield town hall
PA
25/30
First Minister Nicola Sturgeon stands outside St Andrew’s House in Edinburgh to observe a minute’s silence in tribute to the NHS staff and key workers who have died during the coronavirus outbreak
PA
26/30
Staff stand outside the Royal Derby Hospital, during a minutes silence
PA
27/30 London
Police officers observe a minutes silence at Guy’s Hospital
Reuters
28/30
A woman standing outside Sheffield town hall
PA
29/30 Royal Derby Hospital
PA
30/30 Leicester,
NHS workers during a minute’s silence outside Glenfield Hospital
Getty
Treasury sources declined to put an estimate on the cost of extending the scheme by a further four months. But the Institute for Fiscal Studies thinktank said that it brought the total outlay up to £60 billion by the end of July, with further costs beyond that date dependent on the exact design of the scheme in the following three months.
Mr Sunak told the House of Commons the scheme will continue unchanged to the end of July, adding: “Then from August to October, the scheme will continue for all sectors and regions of the UK, with greater flexibility to support the transition back to work.
“Employers currently using the scheme will be able to bring furloughed employees back part-time. And we will ask employers to start sharing with the government the cost of paying people’s salaries.
“Full details will follow by the end of May, but I want to assure people today of one thing that won’t change – workers will, through the combined efforts of government and employers continue to receive the same level of overall support as they do now, at 80 per cent of their current salary up to £2,500 a month.”
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Mr Sunak’s announcement was welcomed as “a huge relief for businesses across the UK” by the British Chambers of Commerce, while the Institute of Directors said a part-time furlough will provide “a much-needed launch ramp so businesses can start to get back up to speed”.
The Chartered Institute for Personnel and Development said the job retention scheme had prevented as many as 4 million redundancies and allowing it to lapse at the end of June would have made it no more than a “waiting room for unemployment”.
But IoD director of policy Edwin Morgan said: “We now need further clarity around employers’ contributions. Many firms that would normally be on strong footing are still in dire straits.
“The extension puts yet more onus on helping those who have been left out in the cold. Countless small company directors have found scant support, and government shouldn’t turn a blind eye to them.”
Shadow chancellor Anneliese Dodds said Mr Sunak was right not to pull away the furlough scheme, which was “a lifeline for millions”.
But she warned: “The government must clarify today when employers will be required to start making contributions, and how much they’ll be asked to pay. If every business is suddenly required to make a substantial contribution from 1 August onwards, there is a very real risk that we will see mass redundancies.”
TUC general secretary Frances O’Grady said the extension of furlough would be “a big relief for millions” and maintaining payments at 80 per cent – rather than cutting them to 60 per cent, as many had expected – was “a win for the pay packets of working families”.
She added: “As the economic consequences of Covid-19 become clear, unions will keep pushing for a job guarantee scheme to make sure everyone has a decent job.”
