According to Bloomberg, the furlough scheme (aka the Coronavirus Job Retention Scheme) is likely to be extended beyond the end of April 2021.
Furlough Scheme Extension
In a recent article dated the 20th January 2021, Bloomberg report that the "Chancellor of the Exchequer Rishi Sunak is drawing up plans to extend support for U.K. jobs in the months ahead as the pandemic lockdown continues to damage businesses and threaten a surge in unemployment, according to people familiar with the matter....The exact form of the measures is expected to be announced in the March 3 budget and will depend on how the Covid-19 pandemic evolves over the [next] six weeks."
Several organisations, including the Confederation of British Industry (CBI), the British Chambers of Commerce (BCC), and the Chartered Institute of Personnel and Development (CIPD), have been calling for the furlough scheme to be extended, but would like the announcement to be made ahead of the Budget, with the CIPD calling for the furlough scheme to be extended until the end of June 2021.
In a recent report entitled, "The future of furlough: Recommendations for now and for any future wage subsidy," the CIPD argue that:-
- The furlough scheme should be extended until the end of June 2021
- The announcement of an extension should be made immediately, as opposed to waiting until the Budget, so as to provide businesses with the certainty required to enable them to plan ahead
- The subsidy should be kept at 80% until the end of April 2021, but then reduced to 70% for the remaining period up until the end of June 2021
- A lower limit should be set in line with the National Minimum Wage, so as to ensure that incomes do not fall below that threshold
- The furlough scheme should be linked to "support for training for workers who are furloughed or working reduced hours or to provide outplacement skills development support for workers who are made redundant. Given uncertainty about the level and timing of any economic recovery, there will continue to be a need to support viable jobs over this period."
Reaction
The author of the CIPD report, Jonathan Boys, states: "The furlough scheme has been a lifeline for thousands of organisations, helping to protect jobs and keep businesses afloat. However, [given] this latest wave of the pandemic......businesses need certainty now on what support will be available to them in the months ahead. Our survey shows that many want the furlough scheme to extend beyond April, but the Chancellor has said that this won’t be reviewed until March at the earliest. Businesses cannot wait that long for certainty, they need a clear indication of Government support to June at least and they need to know this in good time."
Mr Boys adds: "To delay this decision unnecessarily risks losing viable jobs and increasing redundancy costs for employers, which can amount to thousands of pounds. Adding these costs to new hiring costs when businesses do open up again could prove to be a significant outlay for businesses that few will be able to afford. An early decision on extending the furlough scheme will give employers the certainty they need to make the right call for their business and their employees."
The Mayor of London, Sadiq Khan, has also called for an extension of the furlough scheme. He states: "Current plans to end the business rates holiday in March and then the furlough scheme in April create a huge financial cliff edge for employers....Without the certainty that support will remain in place for as long as it is needed, many more businesses could decide to cut their losses and close permanently now.....It’s essential the government continue to support businesses through the rest of the year. Supporting employers to keep people in work over the coming months will be integral to a successful economic recovery from Covid."
