Spring Budget 2021

Chancellor confirms furlough continuation with employer contributions from July

By Nikkie Thatcher

- Last updated on GMT

Summer time: the Government has now confirmed the furlough scheme extension alongside the contributions employers will be expected to pay (image: Getty/oatawa)
Summer time: the Government has now confirmed the furlough scheme extension alongside the contributions employers will be expected to pay (image: Getty/oatawa)

Related tags: Legislation, Employment, Government, Furlough

Chancellor of the Exchequer Rishi Sunak has confirmed the Coronavirus Job Retention Scheme (CJRS) will be extended until the end of September and employers will be asked to partially pay towards hours worked from the summer.

The scheme, which pays up to 80% of a workers' wage up to £2,500, has been extended numerous times previously and was due to finish at the end of April.

The Chancellor originally announced the CJRS (known as furlough) as the pandemic hit the UK in March 2020.

This first phase was due expire in May 2020 but was extended until June and then was continued until October and the 'flexible furlough' was also introduced in July, allowing employees to work part-time and be furloughed part-time.

The scheme was then extended into a third phase from November 2020 until March 2021, and this was followed a further extension to 30 April 2021.

Employer contributions

In the spring Budget today (Wednesday 3 March), Sunak said: “The furlough is being extended to the end of September [with] no change for employees.

“As businesses reopen [we will] ask them to contribute alongside the taxpayer. Nothing will change until July, when we will ask for 10% and 20% in August and September.”

Responding to the latest announcement, UKHospitality chief executive Kate Nicholls welcomed the extension.

She said: “It will help keep businesses afloat and more jobs secure as they trade their way back to prosperity in the years to come.

“This means it is more important than ever the Government sticks to its plan to allow full reopening of venues on 21 June.”

Fragile businesses

However, Nicholls went on to voice concern about how businesses are expected to contribute to the scheme from the end of July.

She added: “It will place unnecessary pressure on fragile businesses just as they are beginning to get back to their feet.

“It is also very disappointing not to have 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 mean time.”

The package of support from the Government means pubs can start to look to the future of their businesses once again, according to British Institute of Innkeeping chief executive Steven Alton.

About the furlough scheme, he added: "The extension of furlough to September will help our pubs to manage the return of their teams until they are able to trade freely again"

Related topics: Legislation

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