Tuesday 1 September 2020 9:17 am

Coronavirus: Government begins to wind down furlough scheme

Companies using the coronavirus furlough scheme will now have to contribute to workers’ wages as the government begins to wind down its emergency support.

The job retention scheme, introduced in March, has paid 80 per cent of salaries for workers on temporary leave, capped at £2,500 per month.

Read more: Number of UK workers on furlough falls to 6.8m

From today this will be reduced to 70 per cent, with employers chipping in 10 per cent.

It forms part of a gradual winding down of the scheme, which is set to be withdrawn completely on 31 October.

Experts have warned the end of the support package could lead to widespread redundancies, with leisure, nightlife, hospitality and events businesses expected to face the brunt of job losses.

The government is offering firms a £1,000 bonus for each employee that is kept on until at least January next year.

However, chancellor Rishi Sunak has repeatedly ruled out an extension to the furlough scheme, arguing it was “not something that can carry on indefinitely”.

Read more: Consumer confidence low ahead of ‘inevitable’ post-furlough job losses

The latest official figures showed that the number of UK employees on furlough has fallen from highs of almost 10m to 6.8m at the end of June as lockdown eased and people returned to work.

In total 9.6m employees, totalling 32 per cent of eligible jobs, were furloughed between March and June.

The claims were made by 1.16m employers, with 61 per cent of eligible businesses claiming. 

Read more: Germany extends job-support scheme – contrasting with UK’s approach

Germany and France have signalled continued wage subsidy support for embattled businesses well into next year.