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Furlough scheme extended and economic support will continue

The Prime Minister’s recent announcement of a second national lockdown will see pubs, restaurants and other non-essential shops closed until December 2nd. The number of coronavirus cases in the country has been steadily mounting, and finally surpassed a million cases last week. 

The Prime Minister’s recent announcement of a second national lockdown will see pubs, restaurants and other non-essential shops closed until December 2nd. The number of coronavirus cases in the country has been steadily mounting, and finally surpassed a million cases last week. 

While the renewed restrictions might ease some of the pressure on the National Health Service, business owners are likely to face the brunt as they are forced to close shop once again. To ease the burden of the economic challenges that this month is expected to bring, the government has announced that it will therefore extend the Coronavirus Job Retention Scheme (also known as the furlough scheme).

Under the scheme, the government will continue to pay up to 80% of the wages of employees who are unable to work remotely, to a maximum of £2,500 per month. Some additional support measures have been announced as well, which include:

  • Businesses forced to shut will receive up to £3,000 per month under an additional Local Restrictions Support Grant. 
  • £1.1 billion is being granted to local authorities, which will be distributed on the basis of £20 per head, for one-off payments to enable them to support businesses more broadly.
  • The mortgage holiday will be extended to provide additional relief to home buyers.

It is hoped that the furlough scheme, in conjunction with the previously implemented Job Retention scheme, will help protect people’s livelihoods and stem any further decline of the economy. 

When initially introduced in March, the furlough scheme proved a great success. Over 1.2 million employers claimed support under the scheme and were able to furlough 9.6 million employees. The current extension of the scheme is likely to continue until December. 

While the move to extend the furlough scheme has been welcomed, several parties voiced their feelings about the government acting too late. Trade and business associations, as well as prominent politicians, have been urging the government to extend the scheme over the past months, warning of mass unemployment and increased pressure on businesses. However, it was only a month after it ended that the government finally decided to extend the scheme, during which several jobs have been lost already. 

Labour MP Catherine McKinnell addressed Chancellor Rishi Sunak on Twitter, saying, "You have said repeatedly you would not extend furlough. At the eleventh hour, it’s too late for businesses who have already made people redundant in anticipation of it coming to an end. People who desperately need that support now. Unforgivable."

An additional concern is that the scheme will provide no immediate aid to people who are working as self-employed professionals. 

Frances O'Grady, the general secretary of the TUC, said: "The extension of the furlough scheme is long overdue and necessary, but ministers must do more to protect jobs and prevent poverty. Furlough pay must never fall below the national minimum wage. We need a boost to Universal Credit and government should not abandon the self-employed."

While the government’s extension of the furlough scheme will likely alleviate some of the pressure on business owners, the country expects a challenging month ahead. As of now, hope remains that the number of cases will have reduced by December and that businesses may be able to slowly resume operations by the end of the year.

Rhea Tibrewala

Rhea Tibrewala

Rhea has had over 5 years of experience in the finance sector, having worked as a digital marketing manager for leading financial institutions across multiple geographies. She is a tech fanatic, an avid reader, and enjoys travelling and music in her free time.
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