Chancellor Rishi Sunak has extended the furlough scheme until the end of March.
The Chancellor announced today (November 5) that the Coronavirus Job Retention Scheme (CJRS) will continue to be made available to all parts of the UK under the highest levels of Covid-19 restrictions until March 2021, with the government paying 80 per cent of wages up to a cap of £2,500.
This policy will be reviewed in January 2021 to decide whether economic circumstances have improved enough to ask employers to contribute beyond NICs and pension contributions.
Mr Sunak said furlough extension will apply to whole of UK.
The next self-employed grant, which covers the period November to January, will also now increase to 80 per cent of average profits up to £7,500 over the three-month period.
However, the incentive of the Job Retention bonus will fall away. The Job Retention bonus is a £1,000 one-off taxable payment to the employer, for each eligible employee that was furloughed and was then continuously employed until January 31 2021.
The chancellor said a retention incentive would be redeployed when the time was right.
Today's announcement comes after the Bank of England injected a further £150bn into the economy in its fight against the coronavirus crisis.
The Monetary Policy Committee said there had been a “rapid rise” in rates of Covid infection since its previous meeting and that the accompanying restrictions would “weigh on near-term spending”.
The level of financial support offered to employers has steadily fallen since the CJRS was first introduced in March, with the government covering 60 per cent of furloughed employees’ wages in October.
Replacement scheme on hold
The CJRS was originally meant to close on October 31 to be replaced by a new, less generous scheme, but last week the government extended it for a month and increased it back to 80 per cent as the UK prepared for a second lockdown.
From today (November 5), England joins the rest of the UK under tighter lockdown measures. Under new lockdown rules, pubs, bars and restaurants will close alongside all non-essential retail outlets.
The Job Support Scheme, which is expected to replace the furlough scheme eventually, will consists of grants to cover two thirds of the salary of each employee off work for a minimum of seven consecutive days.
Eligible businesses will receive a grant of up to £2,100 a month per employee, with employers only required to cover the cost of NICS and pension contributions with no obligation to contribute towards wages.
This scheme was expected to start on November 1, but was postponed until the furlough scheme ends as per the government's update last week.
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