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Government Furlough Scheme Winds Down

From today, the government furlough scheme will now pay up to 70% of employee's wages up to a cap of £2,187.50 a month. Employers will then have to pay the additional 10% wages of employees on furlough. Previously, the Coronavirus Job Retention Scheme has paid 80% of the wages of workers placed on leave, up to a maximum of £2,500 a month.

Zara Tunnicliffe
· 3 min read

From today, the government furlough scheme will now pay up to 70% of employee's wages up to a cap of £2,187.50 a month. Employers will then have to pay the additional 10% wages of employees on furlough. Previously, the Coronavirus Job Retention Scheme has paid 80% of the wages of workers placed on leave, up to a maximum of £2,500 a month.

Next month, the government input will only pay up to 60% of employee’s wages and cap that payout at £1,875, meaning that employers will have to pay 20% of the wages.

The scheme is due to come to wind down entirely by the end of October. Chancellor Rishi Sunak has made no suggestions that this scheme will be extended. He told Good Morning Scotland that helping to pay private firms' wages was "not something that can carry on indefinitely".

As the scheme draws to a close, there is a significant increase in the fear that many people may not have jobs to go back to at all. The scheme has been seen as an excellent way to give employer's more time to avoid making their workers redundant.

In previous comments, Sunak has also said that continued government wage compensation was not the way forward. He said "it is wrong to keep people trapped in a situation and pretend there is always a job that they can go back to, that won't always be the case. In those situations it's better we look forward and provide those people with new opportunities."

According to the Federation of Small Businesses (FSB) one million small employers across the country used the furlough scheme. Craig Beaumont, a member of the FSB, told the BBC that 23% of small businesses were having to consider reducing the number of their staff over the next three months.

Beaumont told the BBC, “sixty per cent of those who work in the private sector do so for a small business, so if that happens without any intervention, then that's a huge increase in mass unemployment."

UK economist, Paul Dales, said that France and Germany had extended their schemes that top-up employee's pay, and argued that this makes the UK look "a little bit short, especially when you take into account that the UK's economy is made up of a higher share of sectors that are hampered by social distancing."

He added that a process should commence, whereby people should start getting reallocated to jobs that will be around for many many years “.

Zara Tunnicliffe

Zara Tunnicliffe

Writing has allowed Zara to learn about topics and explore further those that interest her. Zara creates a range promotional copy for events as well as content for a variety of websites and social media platforms. Zara always look forward to researching interesting topics and sharing them with others through her writing.
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