Chancellor announces changes to UK furlough scheme
The UK’s furlough scheme implemented to save jobs during the coronavirus crisis will finish at the end of October, Chancellor Rishi Sunak has announced.
Mr Sunak said employers will have to start sharing the cost of the scheme. From August, employers must pay National Insurance and pension contributions, then 10% of pay from September, rising to 20% in October.
The Chancellor also revealed that workers will be allowed to return to work part-time from next month but with companies paying the full amount of their wages.
Mr Sunak said the Coronavirus Job Retention Scheme will adjust so “those who are able to work can do so”.
Commenting on the announcement, Andrew McRae, Scotland policy chair, Federation of Small Businesses (FSB), said: “This announcement gives Scottish small business owners and the self-employed additional certainty for the next few months.
“We’ve long argued that by extending the job retention scheme while making it more flexible we can help to get the economy back on its feet. Keeping the current level of government support largely unchanged until August gives firms much-needed breathing space while lockdown is eased. Opening up the part-furlough option a month earlier than planned will help small employers sustainably rebuild their business as restrictions are lifted and trade returns.
“There may be certain sectors for whom a return to any sort of revenue generation remains some way off – such as those in and reliant upon Scotland’s visitor economy, for example. Depending on how things progress over the summer, we might need to look at longer-term support for those particular parts of the economy.
“Scotland’s self-employed community will be relieved to know that the income cliff-edge they were facing in two days’ time has now been removed. While more self-employed people will be able to return to work in the weeks and months ahead, others from barbers to tour guides, look like they face a longer wait. This support is a lifeline to them.
“There are, of course, still those, including limited company directors, who are excluded from the self-employment income support scheme. We have this week written to the UK Small Business Minister with a range of new policy proposals aimed at helping this group.”
Dr Liz Cameron, chief executive of the Scottish Chambers of Commerce, added: “Businesses are mindful that the Coronavirus Job Retention Scheme has cost billions and the pot of money to support employers and the economy is not unlimited. This has been a lifeline for the majority of Scottish businesses preventing a mass tsunami of people losing their jobs.
“The big challenge for Scottish businesses is that the UK government’s new tapered approach to the furlough scheme is not aligned with the Scottish Government’s roadmap out of lockdown. This misalignment will affect crucial areas of the economy such as tourism which are forced to close for longer.
“Before tapering hits, we need to ensure all sectors of our economy are able to generate trade so they are able to pay employees. Currently there is still a lack of clarity for businesses in Scotland over when they can re-open. We urge the chancellor to adopt measures to ensure that businesses facing ruin as the furlough scheme tapers aren’t forced to fall at the last hurdle.’’
Economy secretary Fiona Hyslop said: “I welcome the extension of the JRS to October, which provides certainty for employers and employees in Scotland as we start to emerge from lockdown.
“However, while some employers will be able to contribute to the costs of the scheme, this cannot be a blanket approach across all employers and sectors.
“There remain some sectors that will likely still face restrictions in August, or where we know recovery will take a bit longer and I do not think it is realistic to expect employers who continue to face these challenges to have to contribute to the scheme.
“This is a particular concern for some sectors, such as the hospitality sector, where a very large proportion of employees are currently furloughed.
“If there is not some allowance for this – either within the rules of the JRS, or by providing alternative support to help employers in sectors with the costs of the scheme – then this may just delay, rather than avoid, mass redundancies and business closures in those sectors.”
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