Rishi Sunak extends ‘lifeline’ coronavirus wage guarantee by a month as lockdown continues
The Chancellor said the scheme would be extended for another month at least.
3 min read
The Treasury will continue to pay the bulk of wages for staff put on furlough by the coronavirus crisis until at least the end of June, Rishi Sunak has announced.
The Chancellor said the Government’s Coronavirus Job Retention Scheme would be extended for an additional month, a day after ministers confirmed that the nationwide Covid-19 lockdown would run for at least a further three weeks.
The scheme sees the Government pay 80% of an employee’s wages up to £2,500 a month if they are kept on a company’s books rather than laid off.
It was originally open for three months and backdated from 1 March to the end of May.
But Mr Sunak said: “With the extension of the coronavirus lockdown measures yesterday, it is the right decision to extend the furlough scheme for a month to the end of June to provide clarity.
“It is vital for people’s livelihoods that the UK economy gets up and running again when it is safe to do so, and I will continue to review the scheme so it is supporting our recovery.”
"Employers must continue to make full use of the scheme to furlough workers and protect jobs. There is no reason to make any staff redundant” - TUC general secretary Frances O’Grady
The independent Institute for Fiscal Studies has said the furlough scheme is likely to cost taxpayers billions’ of pounds a month, and the Treasury said further decisions on the scheme would “take into account further developments on the wider measures to reduce the spread of coronavirus, as well as the responsible management of the public finances”.
A stark report by the Office for Budget Repsonsibility, published this week, said a three-month lockdown was likely to see unemployment increase by 2.1 million - and that there remained “uncertainty over the extent to which the coronavirus job retention scheme” would “cushion the blow”.
The latest move to prolong the scheme has already been welcomed by unions and business groups.
Dame Carolyn Fairbairn, director general of the CBI, which represents big employers, said: “The Chancellor’s welcome extension of the Job Retention Scheme beyond the end of May will help protect the economy and prevent unnecessary job losses through this new lockdown phase. Once again, the Government deserves credit for showing agility in the face of unprecedented challenges.”
Mike Cherry of the Federation of Small Businesses said the new June date would provide “a real lifeline for small employers”.
But he added: “The retention scheme must pay out swiftly. Until now, the only means to easing the cashflow crunch for many small firms has been the, to date, lacklustre coronavirus business interruption loan initiative. Small business all over the country are on the brink today. They need cash now.”
And TUC general secretary Frances O’Grady said: "This is very welcome news for workers and their families.
"If the scheme had not been extended, the deadline for redundancy consultation notices would have been tomorrow [Saturday]. So it was vital that this announcement came quickly after the lockdown extension.”
The union boss warned: "Employers must continue to make full use of the scheme to furlough workers and protect jobs. There is no reason to make any staff redundant."
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