Chancellor confirms changes to furlough scheme

Rishi Sunak

UK chancellor Rishi Sunak has revealed that, from August, employers will have to start sharing the cost of the furlough scheme.

While the scheme will remain open until October, employers will be asked to start contributing towards the wages of staff.

The scheme will remain exactly the same for June and July, with no employer contribution at all.

From August, employers will be asked to pay National Insurance and pension contributions. From September, employers will contribute 10% of the furlough grant, with this rising to 20% by October.

Mr Sunak confirmed the scheme will close at the end of October. He said, “The biggest request I’ve heard from businesses large and small, right across our country, 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. This is a critical part of our plan to kickstart the economy.

“The financial security of the furlough scheme has been a relief for many, but at the same time people want to work. No one wants to be at home on furlough. No one wants to feel unable to contribute. So HMRC and the Treasury have worked hard to put the flexible furlough in place not from August 1st, as originally planned, but from July 1st – one month early.

“From July 1st, employers will have the maximum possible flexibility to decide on the right arrangements for them and their furloughed staff. For instance, if you are watching at home and on furlough, your employer could bring you back two days a week. They would pay you for those two days as normal, while the furlough scheme will continue to cover you for the other three working days.

“To allow us to introduce this new, flexible furlough from July 1st, we will need to close the old scheme to new entrants on June 30th. Employers wanting to place new employees on the scheme will need to do so by June 10th… to allow them time to complete the minimum furlough period before then.”

The chancellor added that the self-employment income scheme will be extended, with applications opening in August for a ‘second and final’ grant.

“The final grant will work in the same way as the first did, paid out in a single installment covering three months’ worth of average monthly profits,” Mr Sunak explained, “To maintain the sense of fairness alongside the job retention scheme… the value of the final grant will be 70%, up to a total £6,570.”