Coronavirus: Chancellor extends furlough scheme until March

The Coronavirus Job Retention Scheme (CJRS) will now run until the end of March, with employees receiving 80 per cent of their current salary for hours not worked.

The third grant available for self-employed workers – the Self-Employment Income Support Scheme (SEISS) - will cover November to January and will be calculated at 80 per cent of average trading profits, up to a maximum of £7,500.

Chancellor Rishi Sunak said, ‘I’ve always said I would do whatever it takes to protect jobs and livelihoods across the UK - and that has meant adapting our support as the path of the virus has changed.

‘It’s clear the economic effects are much longer lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support.

‘Extending furlough and increasing our support for the self-employed will protect millions of jobs and give people and businesses the certainty they need over what will be a difficult winter.’

The furlough scheme was initially extended until 2 December. But the Government said it was now going further so that support could be put in place for long enough to help businesses recover and get back on their feet, as well as giving them the certainty they need in coming months.

Evidence from the first lockdown showed that the economic effects are much longer lasting for businesses than the duration of restrictions.

There are currently no employer contribution to wages for hours not worked. 

For the scheme's extension, employers will be asked to cover National Insurance and employer pension contributions for hours not worked. For an average claim, the Treasury said that this accounts for 5 per cent of total employment costs, or £70 per employee per month.

The Government said it would review the furlough extension in January to examine whether the economic circumstances are improving enough for employers to be asked to increase contributions.

Due to the furlough extension, Treasury plans to pay a £1,000 job retention bonus to companies for every furloughed staff member they kept on until the end of January would now be scrapped. The Chancellor said the Government would 'redeploy a retention incentive' later next year after the furlough scheme ends.

Early years sector organisations welcomed the furlough extension, but once again called for emergency funding for childcare providers at risk of closure because of lower demand for childcare as a result of the coronavirus crisis.

They also called for a commitment from the Government to continue to pay for funded childcare places that would normally have been used by families, until the end of the Spring term.

Neil Leitch, chief executive of the Early Years Alliance, said, ‘The measures announced by the Chancellor today, while undoubtedly welcome, are a clear acknowledgement by Government of the long-term economic impact that the latest restrictions are likely to have.

‘As the Chancellor clearly knows based on his actions today, businesses need certainty to plan for the future. It's critical, therefore, that that same certainty is given to early years providers who now face the prospect of reduced demand for several months as a result of changing work patterns and a sharp increase in the number of parents on furlough no longer requiring childcare.

‘If the sector is to survive, it is essential that the Government provides the support early years providers need to get through this difficult period. That means both a commitment to continuing to pay for funded childcare places that would normally have been taken up through to the end of the spring term, and urgent emergency funding to safeguard those settings most at risk of closure, especially providers heavily reliant on private parental income.

‘This, alongside a review of the overall level of funding received by the sector, is absolutely vital if we are to ensure the continued availability of early years education and care for children and families across the country, both during the pandemic and beyond.’

Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA), said, ‘Extending the Coronavirus Job Retention Scheme until the end of March is good news for employers because its replacement was due to be a much less generous scheme.

‘However, the concern for nurseries is how to make sure they have the staff they need to be able to stay open. As we start to look to next year, our members are worrying about what the funding arrangements will be for the spring term and beyond. As the average nursery continues to have fewer children than usual, it’s vital that the Government gives certainty that settings won’t lose out on funding because of the pandemic. This clarity is needed now and can’t be left until the last minute.

‘Childcare providers are having to find higher operating costs to keep their nurseries safe, but lower demand has decimated their income.’