Thursday 21 January 2021 5:52 pm

Rishi Sunak set to extend furlough scheme past April

Rishi Sunak is reportedly set to extend the government’s furlough scheme beyond the end of April in his 3 March Budget.

The chancellor is drawing up plans to extend the £82bn scheme into the summer as the UK looks set to have strict Covid restrictions in place for several months.

Read more: Rishi Sunak mulls over a UK corporation tax hike in March Budget

The scheme, which sees the government pay up to 80 per cent of wages up to £2,500 a month, was originally supposed to end last October.

The bill for the scheme could approach £100bn if extended further, with experts estimating the cost of the scheme as more than £10bn a month.

The UK’s Covid cases are steadily falling, however deaths are at their highest ever point as the UK rolls out the Pfizer and AstraZeneca vaccines.

Foreign secretary Dominic Raab said on Sunday that he hoped the England Covid lockdown could be eased by March, while media reports on Monday speculated that stringent conditions could be in place until May.

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A source close to Sunak told Bloomberg that “support for jobs isn’t going to end” while most businesses cannot open and that the chancellor is likely to extend the furlough scheme beyond April.

When asked about a potential furlough extension, a Treasury spokesperson said: “We’ve invested more than £280bn throughout the pandemic to protect millions of jobs and businesses – and extended our self-employed and furlough schemes through to April so that people have certainty that help is in place.

“At the upcoming Budget the government will set out how we’ll ensure public services continue to receive the investment they need.”

It comes days after the CBI and the British Chambers of Commerce, two of the UK’s largest business groups, called for an extension of Sunak’s furlough scheme.

Read more: Major UK business body calls for furlough scheme extension to July

CBI director-general Tony Danker said: “The government must once again stand shoulder-to-shoulder with businesses to underwrite support for the duration, helping viable enterprises to last the course.”

Mayor of London Sadiq Khan also backed the call for an extension of the furlough scheme and an extension of the business rates holiday past March.

Read more: Sadiq Khan backs CBI’s calls for furlough extension

“Current plans to end the business rates holiday in March and then the furlough scheme in April create a huge financial cliff edge for employers,” Khan said.

“Without the certainty that support will remain in place for as long as it is needed, many more businesses could decide to cut their losses and close permanently now.”

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