Firms must pay 20 per cent of wages for furloughed staff from August, Rishi Sunak will say today as he starts to wind down massive bailout despite fears of a wave of redundancies
- Rishi Sunak is announcing the details of furlough scheme changes after August
- The Chancellor is set to say firms will have to pick up 20 per cent of furlough pay
- Companies have warned of a wave of redundancies as the support is scaled back
- Here’s how to help people impacted by Covid-19
Firms must pay 20 per cent of wages for furloughed staff from August, Rishi Sunak will say today as he starts to wind down the government’s massive coronavirus bailouts.
The Chancellor will declare that businesses should start taking some of the burden despite fears of a wave of redundancies.
He is also expected to give details of the future of separate support for the self-employed – with signs the grants might be partly extended beyond next month.
Environment Secretary George Eustice warned in a round of interviews this morning that people cannot be furloughed ‘indefinitely’ must find way to get back to work safely.
As the cost of the bailouts soar towards £100billion, Mr Sunak is desperately trying to balance the need to wean companies off government money will keeping the economy on life support during lockdown.
UK plc is heading for the worst recession in 300 years, with millions of jobs expected to be lost and the prospects for a quick bounceback unclear.
The furlough scheme currently covers 80 per cent of pay for employees, up to a ceiling of £2,500 a month.
Mr Sunak has already announced that workers will have the same safety net until October, but said firms will have to pick up some of the tab.
Chancellor Rishi Sunak (pictured in Downing Street last night) will declare that businesses should start taking some of the burden despite fears of a wave of redundancies
Figures released on Wednesday showed another 400,000 have been furloughed over the past week, with a million employers now putting in for a total of £15billion
The 20 per cent – 60 per cent split between the employer and state that the Treasury is understood to have settled on is lower than the 50 per cent share for businesses that had been previously mooted.
Earlier this week it emerged the government is now propping up a third of the workforce, with 8.4million jobs on furlough, to a total value so far of £15billion.
Another 2.3million self-employed are receiving grants equivalent to 80 per cent of their usual monthly income, to a ceiling of £2,500.
Bank of England Governor Andrew Bailey underlined the perilous state of the economy yesterday by raising doubts about the speed of any recovery and making clear a fresh wave of quantitative easing – effectively printing money – will be needed.
The intervention came as new economic indicators showed that just 14 per cent of stalled businesses are expecting to restart their operations over the next fortnight, and they are likely to bring back only 31 per cent of furloughed staff.
Online job ads have halved between March and May, according to the Office for National Statistics.
Environment Secretary George Eustice warned in a round of interviews this morning that people cannot be furloughed ‘indefinitely’ must find way to get back to work safely
Since the crisis began in March, the Bank has cut official interest rates to an historic low of 0.1 per cent, announced a £200billion expansion of QE, made moves to ease the financial pressure on large companies and made it easier for banks to lend.
Mr Eustice refused to be drawn this morning on what Mr Sunak will announce, but said: ‘Clearly as we start to emerge from the lockdown and start to get our economy back to work we cannot keep people on the furlough scheme indefinitely.
‘We need to identify ways of moving them off the furlough scheme and back to work.’
Asked on Sky News whether there will be continued support for the self-employed, Mr Eustice said: ‘Well obviously it is nearly a month ago now that we said we wanted to reopen those bits of the economy that couldn’t work from home, so we’ve been encouraging the construction industry for instance to get back to work.
‘A lot of those self-employed professions such as plumbers, electricians and so on, those people are able to return to work now, albeit observing social distancing, but we need to try to start to get bits of the economy back to work.
‘Now I don’t know what Rishi Sunak, the Chancellor, will say later in terms of self-employed and the furlough scheme for them, but I think there is a general overarching message here that we’ve had a very generous furlough scheme in place to help people through these extraordinary times and to ensure that businesses’ overheads could be covered.’