Government Extends Furlough to March and Increases Self-employed Support

THE FURLOUGH SCHEME has been given a five-month extension to Spring 2021, the Chancellor has announced today.

The Coronavirus Job Retention Scheme (CJRS) will now run until the end of March with employees receiving 80% of their current salary for hours not worked.

Support through the Self-Employment Income Support Scheme (SEISS) will also be increased, with the third grant covering November to January calculated at 80% of average trading profits, up to a maximum of £7,500.

The Chancellor of the Exchequer Rishi Sunak said: ”Extending furlough and increasing our support for the self-employed will protect millions of jobs and give people and businesses the certainty they need over what will be a difficult winter.”

The Chancellor also announced an increase in the upfront guarantee of funding for the devolved administrations from £14 billion to £16 billion. This uplift will support workers, business and individuals in Scotland, Wales and Northern Ireland.

The furlough scheme was initially extended until 2 December. But evidence from the first lockdown showed that the economic effects are much longer lasting for businesses than the duration of restrictions.

Employer contribution

Employers will only be asked to cover National Insurance and employer pension contributions for hours not worked. For an average claim, this accounts for 5% of total employment costs or £70 per employee per month. The CJRS extension will be reviewed in January to examine whether the economic circumstances are improving enough for employers to be asked to increase contributions.

The furlough scheme has protected over 9 million jobs across the UK, and self-employed people have already received over £13 billion in support.

Job Retention Bonus

The Jobs Retention Bonus (JRB) will not be paid in February and the government will redeploy a retention incentive at the appropriate time, it says. The purpose of the JRB was to encourage employers to keep people in work until the end of January. However, as the CJRS is being extended to the end of March 2021, the policy intent of the JRB falls away.

Other government support includes:

  • cash grants of up to £3,000 per month for businesses which are closed
  • £1.1 billion for Local Authorities to distribute as one-off payments to enable them to support businesses more broadly
  • Extension of existing government-backed loan schemes and the Future Fund to the end of January, and an ability to top-up Bounce Back Loans
  • an extension to the mortgage payment holiday for homeowners
  • up to £500 million of funding for councils to support the local public health response.
  • More information on today’s policy announcements can be found here: economic support factsheet(PDF, 143KB, 5 pages).

Government also published details of the support it has given to the develoved administrations.

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