Chancellor to announce tapering of furlough scheme

Rishi Sunak is expected to announce that the job retention scheme will be tapered from August, requiring employers to pay a fifth of wages, national insurance and pension contributions for furloughed staff

Written by Georgie Dobie

Posted 29.05.2020 | Business

Chancellor to announce tapering of furlough scheme thumbnail

[Please note that an update was posted following the announcement made by the chancellor on 29 May]

The Guardian has reported that Rishi Sunak plans to make an announcement about his plans to wind down the Job Retention Scheme.  

The report said that the chancellor will announce that employers will be required to pay 20 per cent of wages, while the government pays 60 per cent up to a cap of £2,500 a month, as well as national insurance contributions (which they are currently exempt from) and pension contributions for furloughed staff from August.  

This report comes a couple of weeks after the chancellor extended the furlough scheme until 31 October. At the time of making this announcement he also revealed plans to support people to get back to work from the start of August, as the Government began reopening the economy. To do this, he said that furloughed workers would be able to return to work part-time, from the start of August. He also said that employers would be expected to pay a percentage towards the salaries of their furloughed staff.  

Under the scheme, which was launched in March and expected to last just three months, employers have furloughed 8.4 million staff. The Government has been covering 80 per cent of the wages of furloughed staff, to a maximum of £2,500 a month.  

Earlier this week figures revealed that the cost of the Job Retention Scheme had reached £15bn, while a separate scheme to support self-employed workers had cost almost £7bn.

The Guardian has said that it is also expecting the chancellor to shut the furlough scheme to new entrants to help cap the bill to the Treasury. This move will prevent employers from rotating staff who are currently not working, with those who have spent recent weeks at work. 

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