Furlough scheme ‘set to wind down from July’ as lockdown eased, Rishi Sunak to announce

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RISHI Sunak is expected to announce today he will start to wind down the Government’s furlough scheme for businesses from July – to match with an easing of the lockdown.

The Chancellor was last night finalising details of tweaks to the taxpayer-funded job retention scheme, which is currently paying 6.5 million workers 80 per cent of their wages – up to a limit of £2,500 per month.

Rishi Sunak is expected to extend the scheme, but make some changes to it

The scheme is already due to expire in June but the Chancellor is expected to allow employers to furlough their staff part-time in future to help them ease themselves back to operation, with the possibility of the rest of the wages being topped up by the Government.

He is likely to extend it until September, but he is also set to to reduce the taxpayer-funded support down to 70 or even 60 per cent.

Mr Sunak, who will announce the changes in the Commons at lunchtime, will use the announcement to attempt to slow the alarming rate of people claiming Universal Credit.

Yesterday ministers revealed that the Government has now processed around two million Universal Credit claims since mid-March, when the lockdown was imposed.

Yesterday Boris Johnson all-but confirmed yesterday that the scheme would be continued in some form beyond June.

He told MPs: “It has been one of the most assailant, the most important feature of this country’s response so far to this crisis – that we have looked after some of the lowest paid in our society, the hardest working people and we will continue to do so.”

Asked by HOAR what message he would give to people who work in gyms, nightclubs and other leisure and hospitality jobs who are facing months off work, the PM said: “I do believe that they will recover. “We have an ambition to get at least some hospitality going by July 4, that will be a tough ask, it will be hard to achieve and it depends on a great deal of conditionality that I’ve set out. But that’s the ambition, that’s the target that we’re setting, so at least some of the jobs will start to come back.

“And then over the medium term, I’ve absolutely no doubt that the UK economy is immensely resilient and will come back. But we’re going to have to think a lot more – if we can’t get a vaccine fast then we’re going to have to think a lot more how we make our businesses, our lives Covid-secure while continuing with economic activity. But we’re a very ingenious bunch, the Brits, I’m sure we’ll find ways forward, and that is what we intend to do.”

But Labour has urged him not to cut the scheme too soon – for fear of harming the economy and for jobs to be lost

The Resolution Foundation urged him to keep the scheme open longer for workers in the hardest hit sectors in order to acknowledge the Government’s roadmap revealed some sectors will have to stay shut for at least the rest of this year.

It also wants the Government to allow partial furloughing from June onwards – enabling employees to return to work for some hours, while still receiving 80 per cent of their wages for the hours that they remained furloughed.

Currently the scheme requires furloughed employees not to be working at all in order to qualify for the scheme.

The Federation of Small Businesses have long-campaigned for employers to furlough staff part-time. FSB boss Mike Cherry said last night: “The vast majority of small employers have furloughed staff and they’re telling us loud and clear that the ability to do so on a part-time basis as we move towards recovery will be key to keeping their operations afloat. For firms that don’t have the green light to open until July at the very earliest in particular, we need to see schemes extended significantly – not least the job retention scheme.”

Treasury Committee chairman Mel Stride suggested a “tapering down” of the furloughing scheme to protect jobs and ease the burden on the Exchequer.