Boris Johnson rules out furlough extension claiming it’s ‘stopping people from working’
Furlough was introduced by the government back in March to provide the British workforce with additional financial support. The turbulence brought about by COVID-19 meant many businesses were forced to close their doors, leaving people unable to work. In order to avoid mass unemployment, the Treasury introduced the Coronavirus Job Retention Scheme (CJRS), otherwise known as furlough.
It provides workers with 80 percent of their salary up to £2,500 a month, as well as currently covering National Insurance and pension contributions.
The scheme was originally intended to draw to a close in July, however it was extended to October after a surge in demand.
However, some have said the government may be able to do more with protections.
There have been calls to further extend the scheme, even into 2021, to ensure workers are protected.
READ MORE: Furlough fraud: Government proposal encourages companies to come clean
“I am being absolutely frank with you, we are pushing it out until October, but in the end you have got to get the economy moving.”
In early June 2020, it was revealed by the Treasury that some 8.9 million workers had been placed on furlough across the country.
The cost had spiralled up to £19.6billion by that point in time, with the sum expected to rise over the coming months.
In fact, although furlough is now estimated to cost the government less than originally expected, the figure is still substantial.
The Office for Budget Responsibility estimated in June that the gross cost of furlough would climb as high as £60billion.
This appears to signal towards the financial strain Mr Johnson referenced, and emphasises the need for a return to the status quo, for the sake of the economy.
The furlough scheme is set to change over the coming months, with the first major modification occurring at the start of this month.
On July 1, employers were permitted to bring back their workers on a part time basis on full pay, with these individuals on furlough pay for the remainder of the time.
Until the scheme ends, employers will be required to take on more responsibilities, but employees should be unaffected in terms of pay.
In August, employers will be required to take on their first set of responsibilities in the form of National Insurance and pension contributions, while the government continues to pay 80 percent of salaries.
The significant change comes in September, where the government will drop its contributions to 70 percent, with employers expected to cover 10 percent of furloughed salaries.
Finally, in October, the government will again reduce contributions to 60 percent as Britons are gradually eased back into work.
Published at Fri, 03 Jul 2020 10:20:00 +0000