Firms face August furlough deadline

Businesses told how they’ll soon have to contribute to scheme:

AFINAL self-employment coronavirus grant is to be made available and businesses must start paying towards the worker furlough scheme from August, the Government has announced.

Freelancers will be able to claim up to £6,570 from that date, giving those workers access to a total coronavirus grant of up to £14,070 each.

Businesses will also have to start paying National Insurance and tax contributions for staff in August, ramping up to 10 per cent of furloughed wages in September and 20 per cent in October.

A number of business organisations have welcomed the new measures, but the pubs trade association says it may not prevent the closure of thousands of pubs.

Chancellor Rishi Sunak had previously announced the plan to get businesses to contribute to the Coronavirus Job Retention Scheme (CJRS), but he laid out further details on Friday.

He also revealed that workers can return part-time without losing any furlough payments from July - a month earlier than previously planned, following lobbying from businesses. But businesses must start bearing the costs and from August all companies using the furlough scheme must start paying National Insurance and employer pension contributions.

Emma McClarkin, chief executive of the British Beer & Pub Association, said: “Whilst we welcome the tapered furlough support and increased flexibility announced today, all pubs have to be open and operating viably by July for this scheme to work. Pubs have been closed since March with no income coming in. Expecting them to contribute to furlough costs if they are closed or operationally unviable is simply not feasible.

“Preventing pubs from re-opening as the furlough support reduces means that those pubs will have no income to cover the additional staff costs - risking job losses and pubs staying closed for good.”

In September and October contributions will rise to 10 per cent and 20 per cent respectively, the Chancellor added, but workers still furloughed will keep getting 80 per cent of their wages up to £2,500 a month.

The Government will cover 70 per cent of wages up to £2,190 in September, with employers to pay National Insurance and pension contributions and 10 per cent of wages, representing 14 per cent of the gross employment costs.

The following month, the Treasury will pick up 60 per cent of wages up to a cap of £1,875, with employers paying tax contributions and 20 per cent of wages, representing 23 per cent of the gross employment costs, the Government said.

It added that only 40 per cent of businesses had claimed the pension contributions since the scheme was launched.

Officials added that companies can be flexible with their definition of “part-time” as long as a full-time employee has not returned to normal hours.

The Treasury said: “Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them - and will be responsible for paying their wages while in work.”

Since it was launched, the CJRS has been used by one million businesses to support 8.5 million jobs, at a cost of £15 billion so far.

The scheme is expected to cost a total of around £80 billion, or £10 billion a month, although the Office for Budget Responsibility is set to publish detailed costs next week.

Business groups had asked the Government to ensure that those industries suffering hardest were most protected.

But the Treasury said it was not always clear which sector a business was in, insisting it would not rule out future support if required.

Mr Sunak said: “Now, as we begin to reopen our country and kick-start our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world.”

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 £6.8 billion.

The grant will be worth 70 per cent of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570.

Business West Managing Director Phil Smith said: “For all businesses, but especially larger businesses, knowing what the government employee retention scheme looks like into August will be a critical factor in their decision whether or not to start consultations in mid-June on large scale redundancies. These extension details hopefully will have delayed these redundancies - at least for now.

“We have been asking government, via Adam Marshall at the British Chambers of Commerce, for the updated Employee Retention Support to be flexible and allow part time work. Furthermore, to graduate the tapering off from the 80 per cent, thus avoiding employers having to find large swathes of cash to pay wages before their sales pick up. The Chancellor has listened to our pleas.

“A disappointment, however, must be the closure of the furlough scheme to new entrants in a few weeks’ time. The government has possibly shot itself in the foot with this decision.”