Budget: Furlough scheme to be extended until September

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The Chancellor is to extend the furlough scheme until September as he unveils Budget (Picture: PA Media)

Rishi Sunak will use Wednesday’s Budget to pledge to continue to help businesses and individuals through the "challenging months ahead – and beyond".

He is expected to say that the Coronavirus Job Retention Scheme, which has protected more than 11 million jobs since its inception, will remain in place until the end of September.

But the government’s contribution will be tapered from July – with employers asked to pay in alongside the taxpayer for the cost of furloughed employees.

In July, employers will be expected to contribute 10%, increasing to 20% in August and September, as the economy reopens.

Employees will continue to receive 80% of their salary for hours not worked until the scheme ends.

In Peterborough, January furlough figures saw 2% more workers signed up to the furlough scheme than in December. The most recent data shows that of the 103,900 eligible workers in the local authority, 12,400 were claiming from the scheme in the first month of the year.

This is still lower than at the height of the first lockdown, when up to 25% of Peterborough workers were being paid to stay away from their workplaces.

The Chancellor will also announce further support for self-employed workers, with more than 600,000 people – many of whom become self-employed in 2019/20 – now eligible for cash grants.

A fourth grant from the Self-Employment Income Support Scheme (SEISS) will be available to claim from April, worth 80% of three months’ average trading profits up to £7,500.

The Treasury said that hundreds of thousands more people will be eligible for the grants this time, as tax return data for 2019/20 is now available. Throughout the pandemic, Mr Sunak has faced criticism that newly self-employed people have been unable to benefit from the scheme.

The Chancellor is expected to outline further details of the proposals on Wednesday, alongside plans for a fifth grant.

Ahead of the Budget, he said: "Our Covid support schemes have been a lifeline to millions, protecting jobs and incomes across the UK.

"There’s now light at the end of the tunnel with a roadmap for reopening, so it’s only right that we continue to help business and individuals through the challenging months ahead – and beyond."

The Chancellor is expected to set out a three-point economic plan focused on supporting people through the Covid-19 pandemic, fixing the public finances and building the future economy.

The Treasury said the Budget will build on the government’s plan for jobs and the £280 billion package of support during the coronavirus crisis.

Labour said the support measures could have been done "months ago", accusing the Chancellor of wanting to get his "moment in the sun" rather than protecting jobs.

But the CBI’s chief economist Rain Newton-Smith said extending the scheme will keep "millions more in work and give businesses the chance to catch their breath as we carefully exit lockdown".

Torsten Bell, chief executive of the Resolution Foundation, said: "It’s welcome that the furlough scheme that has seen British workers through this crisis will remain in place until restrictions are lifted, playing a critical bridging role between the lockdown and the recovery.

"The phased tapering off over the summer will also avoid a risky cliff-edge.

"But the peak of unemployment is ahead rather than behind us. We also need to see wider economic stimulus to drive the recovery this autumn, and support for the millions of people who have been without work for long periods during this crisis."