The coronavirus job retention scheme (aka the ‘furlough scheme’) will be ending on the 30th September 2021.
Employers started having to make a contribution towards the salaries of their furloughed staff of 10% from the beginning of July 2021. That contribution increased to 20% from the start of August 2021, and that rate will continue until the furlough scheme ends on the 30th September 2021.
Furlough Scheme
The decision to extend the furlough scheme until the 30th September 2021 was made by Rishi Sunak, the Chancellor of the Exchequer, on the 3rd March 2021 in his budget. In tandem with the decision, it was announced that employers contributions to the costs of the scheme would be phased in, in 3 stages, as follows:-
- Up to the 30th June 2021, the Government provides the employer with a grant under which 80% of furloughed employees’ wages are paid, up to a maximum of £2,500.00 per employee per month, but with employers required to pay the national insurance and employers pension contributions.
- From the 1st July 2021, the taxpayers contribution will fall to 70% of employees wages, with the employers contribution set at 10% plus payment of national insurance and employers pension contributions
- From the 1st August 2021 until the end of the furlough scheme on the 30th September 2021, the taxpayers contribution will fall to 60%, with the employers contribution rising to 20% plus payment of national insurance and employers pension contributions
The fact that employers now have to make contributions, in conjunction with the lifting of covid-19 restrictions, has meant that 3 millions workers have already left the furlough scheme, since the extension was announced in March 2021. Nevertheless, as at the 31st July 2021, less than 2 million workers remained on either full furlough or flexible furlough. The latest report from the Office for National Statistics (ONS), which was released on the 26th August 2021, estimates that between 1.6 million and 2 million remain on furlough, half of whom are on flexible furlough
The Travel Sector Calls For Furlough Scheme Extension
Seventy seven MP’s signed a letter calling for such an extension to the furlough scheme for the travel sector until the end of March 2022.
The chief executive of UKinbound, Joss Croft, has highlighted that the travel sector is in urgent need of further financial support. He states: "September bookings are on the whole confirming, but in a normal year the UK receives 22 per cent of its annual US visitors between September and December, however we expect numbers this year to be well short of this."
Croft added: “Without a meaningful summer season, inbound tourism businesses will struggle to survive what will effectively be their fifth winter in a row, which is why we’re urgently asking Government to extend furlough and roll out sector specific support, so the UK’s inbound tourism industry, worth £28bn in exports annually, can support the country’s economic recovery in 2022 and beyond."
A Government representative stated that the travel sector would “continue to benefit from a reduced rate of VAT until March 2022 and can continue to access the Recovery Loan Scheme.”
Targeted Support
On the 30th June 2021, the Prime Minister, Boris Johnson, ruled out a full extension of the furlough scheme. He said: "No because although the Delta variant is indeed seeded and growing in at least 74 countries around the world, including this one, this is the only country or the country where the protection by immunity against the Delta variant is the highest and the strongest. And that’s why we’re going to continue with our cautious but irreversible road map."
Instead, the Chancellor of the Exchequer, Rishi Sunak, favours more targeted support, As the Guardian points out: "With the ONS reporting more than 1m job vacancies, Sunak will only be forced to rethink his decision to end the furlough if a winter surge in Covid-19 infection rates leads to another lockdown. In the meantime, the chancellor thinks the government should concentrate on targeted – and cheaper – support to help match jobseekers with the vacancies on offer."
