Saturday 23 May 2020 10:17 am

UK will ask employers 'to pay 20-30 per cent' of furlough wages

The UK has drawn up plans to require employers to cover 20 per cent to 30 per cent of furloughed employees’ wages from August, it is reported.

That would help reduce the vast burden of the coronavirus crisis on government finances, The Times newspaper reported.

Read more: Three quarters of UK businesses apply for furlough scheme

The UK on May 12 extended its job retention scheme – the centrepiece of its attempts to cushion the coronavirus hit to the economy – by four months but told employers they would have to help to meet its huge cost from August.

“The Treasury has drawn up plans that would require employers to cover between 20 and 30 per cent of people’s wages,” The Times said. “They would also be required to cover the cost of employer’s national insurance contributions, on average 5 per cent of wages.”

The job retention scheme sees the government pay 80 per cent of wages – up to £2,500 a month – for staff who would otherwise be made redundant.

Read more: Furlough: When will the job retention scheme end?

As of 12 May, more than 1m companies across the UK have furloughed 7.3m staff. That has cost the government over £10bn already, since the scheme launched in late March.

And economists predict the job retention scheme could end up costing the government £84bn since its October extension. That could push government borrowing higher than £300bn this year.

Read more: Job retention scheme could cost £84bn, says UK budget watchdog

Announcing the extension over a week ago, chancellor Rishi Sunak said: “Employers will be able to bring furloughed employees back part time. We will ask employers to share the costs of paying people’s salaries.

“Workers will, through the combined efforts of government and employers, continue to receive the same level of overall support as they do now at 80 per cent of their current salary up to £2,500 a month.”