Furlough extended till March, new measures in January

Nation special report

LONDON: In a major U-turn by the Government, the Chancellor Rishi Sunak announced in Commons on Thursday the extension in jobs furlough scheme set up in the wake of the coronavirus outbreak until the end of March next year. He had previously extended the furlough throughout November due to the second national lockdown in England.

Mr Sunak said the Government’s highest priority remains “to protect jobs and livelihoods”. And the move is needed because of the economic situation caused by the Covid-19 pandemic.

The Chancellor told the Commons: “We can announce today that the furlough scheme will not be extended for one month, it will be extended until the end of March.” The Government will continue to help pay people’s wages up to 80% of the normal amount. All employers will have to pay for hours not worked is the cost of employer NICs and pension contributions. We will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more.”

It follows several days of wrangling over the scope and duration of furlough. It was due to end on 31 October but has been extended to cover the new four-week lockdown in England. That announcement at the weekend sparked a row with Scotland and Wales, which argued that it was unfair for the full support package to be available only when England is in lockdown.

They said the scheme – which currently guarantees 80% of wages up to £2,500 a month for people unable to work – should be on offer if they went into their own full national lockdowns later on.

Bank of England

Mr Sunak’s statement is due a few hours after the Bank of England said it was pumping an extra £150bn into the economy. The Bank warned the resurgence of Covid-19 would lead to a slower, bumpier recovery. About £40bn has been spent on the furlough scheme since it was introduced in March.

It was originally intended to end in May, but Mr Sunak said at the outset that it would be extended “if necessary”. About 9.6 million people have benefited at one time or another, with a steep take-up in the first few months. However, some have questioned whether all the money has been wisely spent.

HM Revenue and Customs, which administers the furlough scheme, has suggested that up to 10% of the money delivered by the scheme to mid-August – some £3.5bn – may have been paid out in fraud or error. It is also unclear whether it has genuinely safeguarded viable jobs or merely delayed the inevitable disappearance of unviable ones.