Sunak announces new furlough scheme

Rishi Sunak's plan is weaker than that proposed by the TUC.

24 Sep 2020| News

Chancellor of the Exchequer, Rishi Sunak, has announced the launch of a new Job Support Scheme, which will be introduced from 01 November 2020.

The programme, which will replace the Job Retention (furlough) Scheme, was announced as part of Sunak’s Winter Economy Plan – a set of proposals made in place of the usual Autumn Budget.

Employers will be encouraged to retain their staff on part-time hours, rather than make en masse redundancies when the Job Retention Scheme is withdrawn. Workers can then be furloughed for the hours they do not work.

In exchange for keeping workers on at full pay for at least 33% of their usual hours, the government will help to pay for the hours they are furloughed in order to make up part of the workers’ pre-Covid salary.

The government will pay 33% of normal wages up to a cap of £697.92 per month for hours furloughed, while employers will be asked to pay an additional 33%.

This means that workers will be paid their normal wage during the hours they are working and at least two-thirds of their wage for the hours they are furloughed.

Frances O’Grady, General Secretary of the TUC, said the scheme was a step in the right direction, but doesn’t go far enough.

“Unions have been pushing hard for continued jobs support for working people,” she said. “But there’s still unfinished business.”

Sunak’s offer is close in nature to the deal the TUC lobbied for, but is weaker on several points.

Unions had suggested workers should receive 80% of their wage while furloughed – the same rate they were paid under the Job Retention Scheme – and that they should be provided with training during this downtime so that the skills base of the workforce can meet the demands of a greener, increasingly automated world.

“Unworked hours under the scheme must not be wasted,” O’Grady said. “Ministers must work with business and unions to offer high-quality retraining, so workers are prepared for the future economy.”

The Job Support Scheme will run for six months, while the Job Retention Bonus (£1,000 for each employee employers retain through to 31 January 2021) will continue and the Self Employment Income Support Scheme will be extended with some changes.

These changes include the addition of two grants for self-employed people. A taxable one-off lump sum of 20% of average monthly profits, capped at £1,875, will be available for those who have continued trading but face reduced demand.

A second grant has been proposed to support self-employed people from February 2021 to the end of April 2021, but Sunak warned the details of this grant may change according to economic circumstances.