Furlough will not be extended – despite one-month delay on Covid lockdown easing

There will be “no changes” to the government’s furlough scheme or other economic support despite a four-week delay on lockdown easing, the government has confirmed.

That includes no change to the ban on commercial evictions, which is still due to end on June 30, the Prime Minister’s spokesman said.

The move comes as the government confirmed that England’s lockdown will not end on June 21 as planned – raising questions for 4.2 million workers still on the job retentions scheme and those in industries that are still unable to trade, such as night clubs.

Currently the government is paying 80% of wages up to £2,500 a month as part of the Coronavirus Job Retention Scheme.

From July, government contributions will fall to 70% up to £2,187.50, with employers having to pay 10%. They then fall again to 60% up to £1,875 in August and September, with employers paying 20%, before the scheme ends altogether.

No10 refused to accept reports that suggest the delay could have a £3billion impact on the already struggling hospitality industry.

The PM’s official spokesman said: ”As you would expect, there will be an economic impact to further delay.

“At the budget we deliberately extended most support well into the autumn, acknowledging there could be uncertainty in the path of the virus.”

Furlough to be wound down from July 1

Employers across the UK will be asked to increase their furlough contributions from July, despite a delay on lockdown easing.

From July 1, the Treasury’s furlough contributions will fall from 80% to 70% per employee.

From August it will drop even further – with firms asked to contribute 20% of 80% pay, plus National Insurance and pension contributions on top.

It means that employers will have to pay a minimum of 10% of wages, bringing the worker’s total monthly earnings to at least 80% of their salary – up to a maximum of £2,187.50.

“As confirmed by the government Budget delivered on March 3, 2021, the scheme will continue to operate until the end of September 2021, with some adjustment to funding levels from July 2021,” Kate Palmer, employment expert at HR consultancy Peninsula, told The Mirror.

Until the end of June 2021, the grant pays 80% up to a maximum of £2,500 per employee per month for hours unworked.

“However, as we move into 1 July 2021, the government’s grant will reduce to 70% of furloughed employees’ wage costs for their unworked hours at a cap of £2,187.50,” Palmer said.

“Pay for furloughed employees must remain at a minimum of 80% at a cap of £2,500, which means that employers must contribute 10% up to £312.50 from their own pocket. Further changes continue into August.”

From August 1, 2021, until the scheme ends, the government’s grant will reduce a final time to 60% of furloughed employees’ wages for their unworked hours at a cap of £1,875.

“With the 80% rule still intact, employers will need to contribute 20% to staff wages up to £625,“ she adds.

“Therefore, from July through to the end of September, employers will have to cover a portion of the employee’s actual wages and the national insurance and pension contributions.”

The furlough scheme has been somewhat of a saving grace for many employers whilst lockdown restrictions have been in place.

However no further extension means employers will have to make internal provisions for their staff if they are unable to return to work.

Will this lead to more job cuts? Let us know your thoughts in the comments section