Chancellor extends furlough scheme until October

The Coronavirus Job Retention Scheme, which started in March, was due to end at the end of next month but will now run until the end of October.

Announcing the extension in the House of Commons today, Chancellor Rishi Sunak said the furlough scheme had protected about 7.5 million jobs at almost 1m companies.

Mr Sunak added, ‘I am extending this scheme because I won’t give up on the people that rely on it. We stood behind Britain’s workers as we came into this crisis, and we will stand behind them as we come through the other side.’

However, he said that from August companies will need to share with the Government the cost of paying salaries, although it is not yet known how much the contribution will be.

The scheme allows employers to claim 80 per cent of wages up to £2,500 a month for staff who have been put on temporary  on paid leave because of the Covid-19 crisis.

The move has been welcomed by sector organisations, but they remain concerned about the childcare sector’s sustainability.

Neil Leitch, chief executive of the Early Years Alliance, said, ‘While we welcome the extension of the Job Retention Scheme and the news that employers will be able to bring employees back part-time as of August, we remain incredibly concerned about the financial viability of the childcare sector, particularly over the next few months as providers look to potentially reopen.

‘With the initial demand for childcare places expected to be significantly reduced, and still no clarity from the Government on whether existing support schemes for the sector will continue during this time, the outlook for many nurseries, pre-schools and childminders across England is very uncertain.

‘The Government’s refusal to reverse its decision to limit how much support childcare providers can access via the Job Retention Scheme has already had a hugely damaging impact on the sector. It is absolutely vital, therefore, that the Government confirms exactly what funding will be made available to providers to ensure they are able to stay afloat during this transitional period.

‘There are many significant financial challenges facing the childcare sector at the moment and the extension of the furlough scheme - while helpful - is, by itself, not the solution.’

Anneliese Dodds MP, Labour’s shadow chancellor, responding to the Chancellor’s announcement on the extension of the furlough scheme, said: ‘The furlough scheme is a lifeline for millions. The Government was right not to pull it away.

‘It is welcome that the Chancellor has heeded the call by Labour, trade unions, and businesses for more flexibility in the scheme, to support employees to go back to work part-time.

‘The Government must clarify today when employers will be required to start making contributions, and how much they’ll be asked to pay. If every business is suddenly required to make a substantial contribution from the 1 August onwards, there is a very real risk that we will see mass redundancies.’