Furlough scheme will be gradually phased out

The Chancellor has said there would be no sudden cliff edge to the government’s coronavirus job retention scheme that was due to close at the end of June

Written by Georgie Dobie

Posted 07.05.2020 | Business

Furlough scheme will be gradually phased out thumbnail

In a TV interview with Chancellor Rishi Sunak, which aired on ITV on Monday, Sunak said that the Government was working towards a gradual phasing out of the job retention scheme (whereby furloughed workers are currently paid 80 per cent of their salaries), as part of Government plans to gradually reduce lockdown measures..

The Chancellor said: “I’m working, as we speak, to figure out the most effective way to wind down the scheme and to ease people back into work in a measured way.” 

The scheme had been extended until the end of June, when it was due to close. But the Chancellor has said that there is to be no sudden cliff edge in July and that he is working towards a gradual phasing out of the scheme. 

According to the Evening Standard, one of the ways that be planning to wind down the job retention scheme is by dropping wage subsidy from 80 per cent (with a cap on monthly payments of £2,500) to 60 per cent and lowering the cap on monthly payments. Another option suggested in the Evening Standard article may be to consider allowing furloughed staff to work with a smaller state subsidy. 

The scheme, which was introduced at the end of March, currently supports 6.3m employees – almost a quarter of Britain’s private sector workforce – and, according to HM Revenue & Customs, has been used by 800,000 companies. 

The costs to taxpayers have spiralled; as of 3 May, HMRC said the total value of claims had already amounted to £8bn. 

The Government is due to review the lockdown today (Thursday 7 May). Prime minister Boris Johnson is expected to announce details about the next phase of the UK’s coronavirus strategy on Sunday. 

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