Furlough scheme to be extended until April and loans to continue, too
The Chancellor has confirmed today that the furlough scheme will be extended an extra month until the end of April 2021.
The scheme had been intended to close in March, itself an extension from an original planned end date in the middle of 2020.
The furlough programme pays 80 per cent towards wages of unworked hours, with the bill to the taxpayer running into the tens of billions.
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Chancellor Rishi Sunak said the move would give businesses “certainty into the New Year.”
Employers will only be required to pay wages, National Insurance Contributions (NICS) and pensions for hours worked; and NICS and pensions for hours not worked.
The Treasury also confirmed the Government’s business loan scheme would also be extended until the end of March 2021, as opposed to the anticipated January date.
Both moves indicate that the Government is expecting not to lift restrictions until later in spring than many had hoped.
The Institute of Economic Affairs sounded a note of caution.
Research fellow Len Shackleton warned: “Announcing the continuation of this form of suspended animation makes it less and less likely that jobs can be maintained in those organisations most affected.
“It may well be counterproductive as more and more businesses realise that there is no end in sight and they may as well bite the bullet, dismiss workers and restructure or even close down.”