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Furlough extension: Will furlough be extended now lockdown is delayed?

Ali KhanJun 30, 2021Business
Furlough extension: Will furlough be extended now lockdown is delayed?

Step four of England’s lockdown roadmap is due to be eased on July 19 and many businesses are desperate to return to normal trading after more than a year of disruption. Although lockdown measures are expected to remain in place for the next few weeks, the Government’s plan to start withdrawing furlough support will begin this week.

Will furlough changes still come in next month?

Despite lockdown measures being extended until at least July 19, the planned drop in Government support under the furlough scheme will continue as planned next month.

From July, the Government will only cover 70 percent of a furloughed employee’s wages, capped at £2,187.50 per month.

This means that from July, employers will need to contribute 10 percent to their furloughed employees’ wages, up to £312.50 per month.

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Commenting on the changes to the furlough scheme, Peggy de Lange, VP of International Expansion at Fiverr, said: “The decision to delay the easing of all restrictions was a necessary step to prevent further spread of the coronavirus.

“However, the Government has failed to recognise this must be coupled with an extension of the furlough scheme to support SMEs as they gradually recover from the devastating economic effects of the pandemic.”

Some have argued that the drop in Government support from 80 percent to 70 percent of employees’ wages should be delayed in light of the delay to further lockdown easing in England.

The original date for easing all remaining lockdown measures in England was given as June 21.

So had the easing of lockdown measures gone ahead on this date, most businesses would already have been open and trading with significantly fewer restrictions by the time furlough support started to be withdrawn.

Ms de Lange added: “The continuation of restrictions as the vaccine programme accelerates is imperative to ensuring that NHS staff do not become overwhelmed again.

“But for the struggling self-employed, to whom insufficient Government support has already had a detrimental impact, the 18-day gap as COVID-19 limits continue but support packages wind down displays a lack of consideration for SMEs and freelancers.

“After almost a year of uncertainty and financial struggle, freelancers and SMEs alike need to be assured that they will not be forgotten throughout the final phase of the pandemic.“

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Will the furlough scheme be extended?

The Prime Minister ruled out extending the furlough scheme past September at Prime Minister’s Questions this week.

SNP MP Dr Philippa Whitford (Central Ayrshire) said: “Due to his failure to maintain strict border quarantine and the delay in adding India to the red list, cases of the Delta variant are surging across the UK.

“As well as a marked regional variation, the biggest ongoing impact is on sectors such as hospitality, entertainment and aviation.

“So rather than starting to reduce financial support from tomorrow, will the Prime Minister agree to extend full furlough and business support beyond September, particularly for those geographical areas and businesses which are most affected?”

Mr Johnson replied: “No because although the Delta variant is indeed seeded and growing in at least 74 countries around the world, including this one, this is the only country or the country where the protection by immunity against the Delta variant is the highest and the strongest.

“And that’s why we’re going to continue with our cautious but irreversible road map and I hope it will command her support.”

Should lockdown measures be put in place after the scheme ends, the Government may have no choice but to reinstate the furlough scheme if businesses have to close again.

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