Budget: Furlough extended until end of September

By Lisa Riley

Published: 03 March, 2021

Chancellor Rishi Sunak will extend the Coronavirus Job Retention Scheme (CJRS), known as furlough, until the end of September in today’s Budget, but businesses will be asked contribute from July.

Between now and the 30 June, the government will continue to pay 80% of wages up to a cap of £2,500 monthly for hours the employee does not work.

From 1 July, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. This will drop to 60%, up to a cap of £1,875 monthly, from 1 August.

Businesses will be asked to contribute 10% in July and 20% in the following two months towards the hours their staff do not work, meaning employees will continue to receive 80% of their salary for hours not worked until the scheme ends.

As per the current CJRS, employers will continue to pay National Insurance Contributions and pension contributions.

Flexible furloughing will also continue to be allowed in addition to full-time furloughing.

“Our Covid support schemes have been a lifeline to millions, protecting jobs and incomes across the UK. There’s now light at the end of the tunnel with a roadmap for reopening, so it’s only right that we continue to help business and individuals through the challenging months ahead – and beyond,” said Sunak.

While welcoming the extension of the furlough scheme, UK Hospitality however said it was “a worry” that businesses would be expected to contribute to the scheme from the end of July.

“It will place unnecessary pressure on fragile businesses just as they are beginning to get back to their feet,” said CEO Kate Nicholls.

“It is also very disappointing not to have employer National Insurance Contributions removed from the scheme. Businesses are burning through their cash reserves and many will have exhausted them before they have a chance to reopen. Not all businesses are going to be out of the traps instantly. It will take time for them to reopen and they will be racking up costs in the meantime,” she said.

It is now “more important than ever" that the Chancellor delivers a wider package of support in his Budget statement, she added.

“Extended furlough alone will not be enough to give businesses the support they need to survive the spring and summer, particularly if businesses are now incurring additional costs. We must have an extension of the VAT cut and business rates holiday if we expect to see businesses survive and thrive after the crisis has passed.”

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