Govt extends job retention scheme to October

The Government’s Coronavirus Job Retention Scheme (CJRS) will be extended to October, Chancellor Rishi Sunak has announced.

Sunak confirmed that employees will continue to receive 80% of their monthly wages, up to £2,500 per month, but added that the Government would start asking companies to “start sharing” the cost of the scheme from August onwards.

The Chancellor also revealed 7.5 million workers are now covered by the scheme, a figure up from 6.3 million last week, and he told the House of Commons that also from August onwards, the scheme would be continued for all sectors but with greater flexibility to support the UK’s transition back to work.

Employers currently using the scheme would be able to bring furloughed employees back part-time, Sunak added.

Hargreaves Lansdown personal finance analyst, Sarah Coles, commented: “Today’s extension will come as a huge relief to the 7.5 million people relying on the scheme – especially given that so many were expecting dramatic cuts to monthly payments.

“It has been incredibly unsettling for furloughed employees to have to sit at home and watch the clock tick towards the end of June – with no idea of what was lying in wait for them at that point. The extension gives them a few more months of income security.

“However, the enormous cost of the scheme means it can’t continue indefinitely. And while there’s no need to panic immediately, it’s well worth taking the opportunity to put a Plan B into place.

“If you can cut your costs and build an emergency savings safety net over the next few months, you can head towards October with more confidence in your ability to cope financially as the crisis unfolds.”

Sunak's announcement came after think tank, Resolution Foundation, had earlier stated the Government should should reject calls for a rapid ending of its CJRS, and should instead set out plans for a gradual phasing out of the scheme, with the timing dependent on the lifting of lockdown restrictions.

Resolution Foundation's report, published today, warned that decisions about the future of the CJRS and moving too quickly could cause a second surge in unemployment – while moving too slowly could fail to support the recovery.

The think tank suggested that allowing ‘partial furloughing’ would support the reopening of the economy, with the report indicating this would enable employees to return to work for some hours, while still receiving 80% of their wages for the hours that they remained furloughed.

Resolution Foundation chief executive, Torsten Bell, said that the CJRS has been an “essential lifeline for millions of families and hundreds of thousands of firms”.

“The scheme cannot last forever, however,” he commented. “It should be phased out gradually, with a longer timeframe for the hardest-hit sectors. The Chancellor should also use the scheme to support the recovery by asking employers to contribute towards the wage costs of furloughs and allowing ‘partial furloughing’, with workers returning to work for some of the week, even if not all.

“The retention scheme could end up costing almost £50bn. That’s a huge sum – but money well spent given the huge threat posed to our health, economy and living standards by this pandemic.

“This policy has made a huge difference in this crisis. It now needs careful and gradual change to ensure the benefits it has provided are secured rather than squandered.”

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