The Government is facing calls to delay the phasing out of its furlough scheme amid warnings of the impact on the UK’s recovery from the pandemic.
The Coronavirus Jobs Retention Scheme (CJRS, or furlough) faces changes from today (1 July 2021). Employers will now have to contribute 10% of furloughed workers’ salaries, rising to 20% in August and September.
As an example, the cost of keeping someone who earns £20,000 per year will rise from £155 in June, to £322 in July, reaching £489 in August and September, according to figures from the Institute for Fiscal Studies (IFS).
Chancellor Rishi Sunak has faced calls from Labour to extend the scheme, because of the delay to easing lockdown restrictions until 19 July.
“A month’s delay may seem like a short time but for businesses in retail, hospitality and leisure, legally closed from trading or relying on the summer season, the delay is another blow,” said shadow chief secretary to the Treasury Bridget Phillipson.
Business groups and unions have also voiced concerns about the Government’s refusal to extend the scheme.
British Chambers of Commerce Director General Shevaun Haviland said: “The taper of government payments into the furlough scheme should be immediately deferred until we take the final step in the road map, and further grant support should be extended to the worst affected businesses.”
Unite the Union bosses are warning that going ahead as planned will see ministers “pull the rug from under businesses” and leave the purpose of the scheme “wasted”.
Assistant General Secretary Steve Turner said: “The country has invested billions in keeping people in work ready for recovery, but if ministers ‘pull the rug’ from under businesses too soon jobs will go and our heroic national investment will be wasted.
“Nobody is arguing for eternal furlough, but the Government has to work with employers and the trade unions to chart a new course through the pandemic. One that in the longer-term recognises short-term business and economic disruption with short-time working protections, and right now, does least damage to the economy and the livelihoods of millions of working people.”
A Government spokesperson said: “We deliberately went long with our support to provide certainty to people and businesses over the summer, and that support, which is a substantial amount of funding, is continuing with the furlough scheme in place until September.”
As it stands, the changes to furlough are in effect from today, 1 July 2021. Our team of payroll experts have helped many businesses across various industries, of all sizes navigate the furlough scheme. If you feel you could benefit from expert payroll advice, please get in touch today.