‘Flexible furlough’ to allow part-time work as Sunak kick-starts economy
Chancellor announces changes to coronavirus support package to help get Britain moving again
WORKERS will be able to return parttime and continue to receive government support from July, with Rishi Sunak ushering in the start of a “more flexible furlough”.
Declaring it was time to “kick-start” the economy, the Chancellor said last night that employees on furlough would soon be able to go back to work on flexible hours.
Announcing changes to the Government’s coronavirus support package, Mr Sunak signalled it was time for the country to gradually get back to work.
He said: “Across the country, office lights will be turned on and windows thrown open. Work clothes and school uniforms will be pulled out of the wardrobe, shops and factories will start to hum with activity.
“And as Britain returns to work we need to adapt to the emergency programmes we put in place to bridge through the crisis.”
The part-time provision was scheduled to be brought in this August, but has been pushed forward by a month after businesses lobbied the Treasury for more flexibility in the scheme.
Mr Sunak told the Downing Street briefing: “The biggest request I’ve heard from businesses large and small … is to have the flexibility to decide what is right for them.
“So to protect jobs and help businesses decide how quickly to bring their workforce back, we are introducing a new, more flexible furlough.”
Mr Sunak also warned businesses that they must begin to bear the cost of the Coronavirus Job Retention Scheme. He said it was “right” that employers begin to contribute in the final months of the support package.
“But I understand that businesses and employees have been through an incredibly difficult time so I have decided to ask employees to pay only a modest contribution,” he added.
The tapering of the scheme will begin in August, when employers will be required to pay employees’ National Insurance and tax contributions. From September, firms will be required to pay 10 per cent of wages, rising to 20 per cent in October.
Despite the rising costs for businesses, Mr Sunak insisted the furlough scheme remained one of the “most generous” in the world and businesses would end up paying only five per cent of a “typical” employee’s wages over the eight months of the scheme. In July, employees can begin returning to work under the system, setting their hours with their employers.
Treasury officials signalled the definition of “part-time” will be flexible, as long as a full-time employee does not return to regular hours.
Businesses will be required to pay 100 per cent of employee’s salaries for days worked, with the Government topping up pay for time off on furlough.
Mr Sunak said: “The financial security of the furlough scheme has been a relief for many, but at the same time, people want to work.”
Since it was launched, the furlough scheme has been used by one million businesses to support 8.5 million jobs, at a cost of £15billion so far.
Treasury estimates suggest it is costing £10billion every month and is expected to leave the Government with a total bill of around £80billion.
There will be no specific tapering for individual sectors, after the hospitality industry, where many businesses will be forced to stay shut, pleaded with the Government for extra support. It is understood the idea was dismissed because of complexities in roll out and a desire to give economywide support.
The Treasury also announced further support for the self-employed, with freelance workers able to apply for a final grant from August 1.
The Chancellor had faced calls, including from a cross-party group of 113 MPS, to extend the scheme for self-employed workers, which has so far seen 2.3 million claims worth £6.8billion.
Mr Sunak said: “Now, our thoughts, our energies, our resources, must turn to looking forward to planning for the recovery. And we will need the dynamism of our whole economy as we find our way back to prosperity.”
Mr Sunak signalled that the furlough scheme would not return if a second spike caused another lockdown, insisting the scheme “will end in October”.
‘We will need the dynamism of our whole economy as we find our way back to prosperity’