The government is extending until the end of March the payment of furlough worth 80 per cent of salary for employees unable to work because of companies being closed by coronavirus regulations, chancellor Rishi Sunak has said.
An income support grant for self-employed people, covering the period November to January, will also increase from the planned 55 per cent to 80 per cent of average profits up to £7,500.
Mr Sunak confirmed that the support will be provided to all four nations of the United Kingdom equally throughout the period.
But he said that the planned £1,000 job retention bonus for any furloughed worker kept in a job until February was being postponed to a later date.
The chancellor’s announcement came as the Bank of England revealed it will pump an additional £150bn into the economy through quantitative easing to shore it up during a second English lockdown.
The additional furlough payments are expected to cost £8bn or more over the four months from December to March, with the exact sum dependent on take-up. The bill for furlough comes in at around £1bn a month for every 1m participants.
Meanwhile, devolved authorities will receive an additional £2bn as a result of today’s announcement, and the extra support for the self-employed will cost £2.8bn in the period November- January.
Mr Sunak’s UK-wide job retention scheme helped up to 9.6m workers during the first wave of Covid-19, and around 2m were believed still be be receiving support by the end of October.
It was due to end last weekend, but was extended to 2 December in response to Boris Johnson’s announcement of a four-week English lockdown, starting today.
But there was anger over the prospect that payments would then be reduced to 67 per cent of salary in companies forced to close in tier three regions, with those outside these areas having to work for at least a day a week to qualify for the new job support scheme.
Mr Sunak told the House of Commons that his highest priority was “to protect jobs and livelihoods” and recognised that businesses and families wanted “certainty” over the months ahead.
He said: “The government’s intention is for the new health restrictions to remain only until the start of December. But as we saw from the first lockdown, the economic effects are much longer-lasting for businesses and areas than the duration of any restrictions.
“And, as the Bank of England has said this morning, the economic recovery has slowed and the economic risks are skewed to the downside.
“Given this significant uncertainty, a worsening economic backdrop, and the need to get people and businesses security through the winter, I believe it is right to go further.
“So we can announce today that the furlough scheme will not be extended for one month, it will be extended until the end of March.
“The government will continue to help pay people’s wages, up to 80 per cent of the normal amount. All employers will have to pay for hours not worked is the cost of employer NICs (national insurance) and pension contributions.”
A review in January will decide whether to increase employers’ contributions, said Mr Sunak.
Mr Sunak’s opposite number Anneliese Dodds, however, urged him to apologise to workers already made redundant as a result of the eleventh-hour changes to the scheme and criticised the government’s delay in implementing restrictions recommended by the Scientific Advisory Group for Emergencies that had “cost lives and livelihoods”.
Referring to ministers’ previous refusal to extend the furlough scheme, she asked: “How many jobs could have been saved if this government had recognised reality and let businesses plan for the future?
“Will the chancellor apologise to those who have already been made redundant because of this last minute approach?”.
She added: “Businesses and workers have been pleading for certainty from this government, but the chancellor keeps ignoring them until the last possible moment after jobs have been lost and businesses have gone bust.
“The chancellor’s fourth version of his winter economy plan in just six weeks. The Chancellor can change his mind at the last minute, but businesses can’t.
“We need a chancellor who is in front of the problems we face, not one who is always a step behind.”
The Trade Union Congress general secretary Frances O’Grady described the move as a “positive step” but insisted there was still gaps in the government’s support package.
“It’s not right to ask millions of low-paid workers on furlough to survive on less than the minimum wage. The chancellor must fix the scheme so their pay is topped up to 100 per cent,” she said. “We also need an urgent boost to both sick pay and universal credit. No-one should be plunged into financial hardship if they have to self-isolate or if they lose their job.”
