Furlough Scheme set to change, amidst concerns for hardest-hit sectors

The Coronavirus Job Retention Scheme (JRS) will be closed to new applications from the end of June, as Government sets out a route for the economy to get going after the lockdown.

From August, employers will be expected to pay 25 per cent of the wages of their furloughed staff, the Chancellor Rishi Sunak is expected to announce. Mr Sunak will reveal details of how people will be able to start to work part-time while still having their wages partly paid by the JRS.

The Scheme, in which the Government pays 80 per cent of wages for employees, to a maximum of £2,500 a month, has proved hugely popular. Figures released by HMRC on Monday show that 8.4 million people in the UK have now been put on furlough by their employers, with the total value of claims made reaching £15 billion.

According to a report in the Financial Times, the cost of the furloughing scheme is potentially “as much as the NHS” budget. This, the Chancellor says, is “not a sustainable solution”, adding: “I’m working, as we speak, to figure out the most effective way to wind down the scheme and to ease people back into work in a measured way.”

However, Torsten Bell, director of the think tank Resolution Foundation, says that the number of workers signing up to be paid by the Government “should remind us how badly needed the retention scheme is”. He argues that, rather than a one size fits all approach, the Government would do well to treat the hardest-hit sectors of the economy, such as hospitality and leisure which is likely to continue to be heavily restricted for some time, differently from the rest.

“This will give businesses more time to adapt to the new reality – and hopefully give demand more time to return,” Mr Bell says.

As always, we continue to monitor developments, and will provide more information relating to Government advice and announcements as they come available.

If you or your business require assistance to navigate this difficult time, please contact your usual Beavis Morgan Client Partner or email info@beavismorgan.com.

For further information about the Government measures to protect individuals and businesses, visit our COVID-19: Support for UK businesses hub.