Chancellor announces four month extension to Coronavirus Job Retention Scheme

The Government’s landmark furlough scheme will run until October, following news that 7.5 million workers and almost 1 million companies have signed up for support.

Speaking today (May 12) in the House of Commons, Chancellor Rishi Sunak announced that there would be no changes to the amount employers and workers can claim through the scheme until the end of July.

The Government will continue to pay 80 per cent of the salary of furloughed workers up to £2500 per month until August, wherein the scheme will continue for all sectors but with more flexibility to enable firms to bring staff back to work.

The news follows speculation that the coronavirus job retention scheme (CJRS) would be cut to 60 per cent, but this does not look to be part of the Government’s plans, at least in the near-term.

It is thought that from August, furloughed workers will be able to return to work part-time, with employers being asked to pay a percentage towards salaries as the Government tries to reduce its contribution.

The CJRS is currently costing the Treasury £14 billion per month, almost the same amount as monthly outgoings to run the NHS.

Uptake for the scheme has also been higher than initially anticipated, with business groups describing it as a “lifeline” for employers across the board.

At 7.5 million, roughly a quarter of all British workers are now furloughed, indicating that many millions might have lost their jobs had the CJRS not come into effect.

Adam Marshall, director-general of the British Chambers of Commerce, said: “The extension of the CJRS will come as a huge help and a huge relief for businesses across the UK.

“The Chancellor is once again listening to what we’ve been saying, and the changes planned will help businesses bring their people back to work through the introduction of a part-time furlough scheme.

“Over the coming months, the government should continue to listen to business and evolve the scheme in line with what’s happening on the ground. Further support may yet be needed for companies who are unable to operate for an extended period, or those who face reduced capacity or demand due to ongoing restrictions.”

Dame Carolyn Fairbairn, CBI director-general, added: “The Chancellor is confronting a challenging balancing act deftly. As economic activity slowly speeds up, it’s essential that support schemes adapt in parallel.

“Extending the furlough to avoid a June cliff-edge continues the significant efforts made already and will protect millions of jobs.

“Introducing much needed flexibility is extremely welcome. It will prepare the ground for firms that are reawakening, while helping those who remain in hibernation.

“Firms will, of course, want more detail on how they will contribute to the scheme in the future and will work with government to get this right.

“Above all, the path of the virus is unpredictable, and much change still lies ahead. The government must continue to keep a watchful eye on those industries and employees that remain at risk. All schemes will need to be kept under review to help minimise impacts on people’s livelihoods and keep businesses thriving.

“The greater the number of good businesses saved now, the easier it will be for the economy to recover.”

Reacting to the announcement, Nic Smith, managing director of Gateshead-based Commercial Maintenance Services (UK) Ltd, said the Chancellor’s decision to extend the furlough scheme will provide vital support to businesses if the economy fails to bounce back quickly.

He said: “It is superb news and great support from the Government. This will be enough to bridge the gap if the economy is slow to respond.”

He also praised Rishi Sunak for introducing a part-time element to the furlough scheme, adding: “It is difficult to bring a person back off furlough when there isn’t the revenue available to support that role.”

The company, which installs, maintains and repairs critical business systems, including heating, hot water, gas and electrical systems, was forced to furlough 66 of its 136 staff based across the UK at the start of April as work from some clients dried up.

However, CMS has continued to work with care homes and hospitals and has won some significant new work during the pandemic, which has provided vital income.