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UK government extends furlough scheme until end of June

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The government has been forced to extend its wage-subsidy programme for workers until the end of June following the decision to keep Britain in full lockdown for at least a further three weeks.

In a sign of the mounting cost of the Covid-19 pandemic on the state’s finances, the chancellor, Rishi Sunak, said his furloughing scheme would now be in place for a minimum of an extra month.

One of Britain’s leading thinktanks – the Resolution Foundation – has estimated that the coronavirus job retention scheme (CJRS) will cost the exchequer £40bn in its initial March to May phase given the large number of private firms taking advantage of it.

The Treasury had to move swiftly to prevent firms triggering statutory redundancy consultations following the news on Thursday that the lockdown would continue.

With the easing of restrictions contingent on the number of new cases of the virus coming down, Sunak left open the possibility of further extensions to the programme, designed to limit the rise in unemployment caused by businesses being shut down.

The scheme involves the Treasury paying 80% of the wages of workers up to a maximum of £2,500 per month to prevent them being laid off by their employers.

Sunak, said: “We’ve taken unprecedented action to support jobs and businesses through this period of uncertainty, including the UK-wide job retention scheme. With the extension of the coronavirus lockdown measures on Thursday, it is the right decision to extend the furlough scheme for a month to the end of June to provide clarity.

“It is vital for people’s livelihoods that the UK economy gets up and running again when it is safe to do so, and I will continue to review the scheme so it is supporting our recovery.”

The Treasury cited a report from its independent forecasting body – the Office for Budgetary Responsibility – which said the CJRS was limiting the impact on unemployment.

Despite pledging to spend whatever it takes to deal with the fallout from the coronavirus, Sunak is concerned about the impact of a protracted lockdown on the the budget deficit.

“Future decisions on the scheme will take into account further developments on the wider measures to reduce the spread of coronavirus, as well as the responsible management of the public finances,” the Treasury said.

The TUC’s general secretary, Frances O’Grady, said: “This is very welcome news for workers and their families.

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“If the scheme had not been extended, the deadline for redundancy consultation notices would have been tomorrow [Saturday]. So it was vital that this announcement came quickly after the lockdown extension.

“Employers must continue to make full use of the scheme to furlough workers and protect jobs. There is no reason to make any staff redundant.”

Figures showing a sharp increase in the number of claimants for universal credit suggest that despite the CJRS, the UK is on course for a sharp rise in unemployment this year.

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