UK government extends Furlough to March and increases self-employed support

UK government extends Furlough to March and increases self-employed support

Workers across the United Kingdom will benefit from increased support with a five-month extension of the furlough scheme into Spring 2021, the Chancellor announced today, 5 November.

– businesses and people across the UK given certainty over winter months with further support announced by Chancellor Rishi Sunak

– the furlough scheme will now be extended until the end of March – protecting millions of jobs across all nations

– the next self-employed income support grant will also increase from 55% to 80% of average profits – up to £7,500

The Coronavirus Job Retention Scheme (CJRS) will now run until the end of March with employees receiving 80% of their current salary for hours not worked.

Similarly, support for millions more workers through the Self-Employment Income Support Scheme (SEISS) will be increased, with the third grant covering November to January calculated at 80% of average trading profits, up to a maximum of £7,500.

The Chancellor also announced today an increase in the upfront guarantee of funding for the devolved administrations from £14 billion to £16 billion. This uplift will continue to support workers, business and individuals in Scotland, Wales and Northern Ireland.

The furlough scheme was initially extended until 2 December. But the government is now going further so that support can be put in place for long enough to help businesses recover and get back on their feet – as well as giving them the certainty they need in coming months. Evidence from the first lockdown showed that the economic effects are much longer lasting for businesses than the duration of restrictions.

There are currently no employer contribution to wages for hours not worked. Employers will only be asked to cover National Insurance and employer pension contributions for hours not worked. For an average claim, this accounts for just 5% of total employment costs or £70 per employee per month. The CJRS extension will be reviewed in January to examine whether the economic circumstances are improving enough for employers to be asked to increase contributions.

Throughout the pandemic, the government has acted with speed to protect lives and safeguard jobs with an unprecedented £200 billion support package. The furlough scheme has protected over nine million jobs across the UK, and self-employed people have already received over £13 billion in support. This is in addition to billions of pounds in tax deferrals and grants for businesses.

On top of this, the government has announced:

– cash grants of up to £3,000 per month for businesses which are closed worth more than £1 billion every month

– £1.1 billion is being given to Local Authorities, distributed on the basis of £20 per head, for one-off payments to enable them to support businesses more broadly

– plans to extend existing government-backed loan schemes and the Future Fund to the end of January, and an ability to top-up Bounce Back Loans

– an extension to the mortgage payment holiday for homeowners

– up to £500 million of funding for councils to support the local public health response.

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Commenting on the Chancellor Rishi Sunak’s economy update, British Chambers of Commerce Director General Adam Marshall said: 

“A further extension of the furlough scheme and more generous grants for the self-employed are important steps in protecting jobs and providing certainty for our business communities beyond the immediate shock of a four-week lockdown.

“These changes give businesses significant reassurance over an uncertain winter, but many will understandably still wish for the government to give a clearer view of the road ahead. Government must set out longer-term measures over the next 12 months to give firms greater certainty and confidence to plan proactively, rather than to react to changes in support from week to week.

“As well as support on jobs, reduced demand will impact firms’ cashflow across the country, not just those placed under the toughest restrictions. More generous grants will be required if those businesses are to weather a difficult winter ahead.

“Despite the Chancellor’s announcement, there are still many businesses and individuals who have, through no fault of their own, been unable to access any government support since the start of the pandemic and will require support if we are to avoid significant increases in unemployment and business failures.

“Ultimately, there can be no substitute for a fully functioning economy. Fundamentally, that means the government using the time afforded to them through another lockdown to significantly improve the Test, Track and Isolate system, which remains key to keeping the economy open.”

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