Thursday 5 November 2020 1:11 pm

Chancellor's furlough extension ‘the right call’, say business bodies

Business bodies have welcomed the chancellor’s extension of the furlough scheme until the end of March as “the right call”, but warned there was “more to do” to help businesses through winter lockdowns.

Rishi Sunak today announced additional financial support for employees across the UK unable to work amid national lockdowns.

Read more: Breaking: Rishi Sunak extends furlough scheme until end of March

The government will pay up to 80 per cent of wages for furloughed workers in the devolved nations, and will increase grants for self-employed workers to 80 per cent of average profits.

Jonathan Geldart, director general of the Institute of Directors (IoD), said the move was “the right call from the chancellor”.

“This will give directors much greater confidence about their ability to keep staff on board through the winter,” he said.

The furlough scheme was due to wind down last Saturday in favour of a less comprehensive Jobs Support Scheme, which would see the government pay two thirds of employees’ salaries to businesses forced to shutter under fresh lockdown measures. 

However, Prime Minister Boris Johnson over the weekend announced an extension to the furlough scheme until 2 December, alongside a nationwide lockdown across England.

The chancellor has now extended the furlough renewal until 31 March, following backlash from the devolved nations that financial support for the UK would only coincide with England’s lockdown, and not potential future lockdowns elsewhere.

Business bodies today praised the move as offering more security for businesses and workers across the country.

“While the Treasury had improved the Jobs Support Scheme, furlough is a known quantity,” said Geldart. 

“To support as many jobs as possible through the crisis, consistency and clarity is vital. Businesses need the ability to plan ahead, with cashflow being critical through the first quarter of 2021 particularly in light of potential Brexit impacts. The more information government can provide on support for the rest of year, the better position organisations will be in.”

Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC), said the furlough extension was a “good move”, but urged the government to roll out further support. 

“Businesses want support that is stable across the crisis, rather than changing week-to-week. So the extension of the furlough scheme to the end of March is a good move,” he said.

“But there is more to do. The fight against the virus is being compromised by the failure to fund Statutory Sick Pay (SSP) for every worker if they need to self-isolate.”

He added: “The vast majority of businesses supplying temporary workers, who are vital to sectors like education, logistics and care, are ineligible for SSP support — and a stand-off over who pays could lead to greater economic damage, as work gets shelved.”

Addressing the House of Commons this afternoon, Sunak also announced the government will suspend the job retention bonus, which was due to hand employers £1,000 for every furloughed member of staff returned to work.

The chancellor said the government will “redeploy” the retention bonus “at the appropriate time”.

Adam Marshall, head of the British Chambers of Commerce, said the furlough extension was an “important step”, but warned the suspension of the job retention bonus meant an “uncertain winter” for businesses.

Read more: Post-furlough job losses hit young and minority workers hardest, study shows

“Government must set out longer-term measures over the next 12 months to give firms greater certainty and confidence to plan proactively, rather than to react to changes in support from week to week,” he said.

“Despite the chancellor’s announcement, there are still many businesses and individuals who have, through no fault of their own, been unable to access any government support since the start of the pandemic and will require support if we are to avoid significant increases in unemployment and business failures.”