Furlough scheme set to wind down as national debt goes through the roof

At present, almost 8 and a half million people are on furlough, equating to a quarter of the total jobs in Britain.

 

A quarter of company directors surveyed by the Institute of Directors say they would not be able to afford to pay even 20 per cent of the furlough scheme if required – as well as having to pay national insurance contributions, an additional 5 per cent, on top.

 

The Coronavirus Job Retention Scheme has been vital in helping people stay afloat financially during the crisis, but it comes at a high price. The scheme is costing the Government billions every month. The scheme, which pays 80 per cent of people’s wages up to a total of £2,500, is assessed to have cost around £15billion so far.

 

Stopping the funds

 

Companies will likely be unable to furlough more staff as the Government looks to wind down the scheme.

 

Rishi Sunak is expected to announce the slow end of the emergency funds set aside to help struggling companies through the first phase of the coronavirus crisis.

 

However, part-time working from furloughed staff is expected to be allowed from August, following pressure from MPs and retail associations.

 

The Treasury is expected to make these announcements while locking in a cut-off date after which no employees will be able to join the furlough scheme.

 

So what can be expected?

 

As lockdown rules begin to ease slightly over the coming weeks and months, provided that the number of infections and deaths continue to decrease, more and more people will be encouraged to go back to work, even on a part-time basis.

 

It is thought that staff will be paid full wages by their firm for any hours worked and will continue to be covered by the furlough scheme for the hours they do not work.

 

Firms in all sectors will be required to contribute a quarter of the wages of any furloughed workers. Also, they will have to restart paying National Insurance, although the Government would cover pension contributions.

 

How about the self-employed workers?

 

The government is yet to decide whether to extend the self-employment income support scheme (SEISS) beyond the end of May. The Self-Employed Income Support Scheme (SEISS), which has cost £10.5bn so far, is due to expire in five days’ time.

 

What do we make of all this?

 

There is no denying that the furlough scheme has helped millions of people during this hard time. A good government is there to help and protect its public, especially through the hardest times, which is what this scheme has done.

 

As a company ourselves, we understand the stress the coronavirus crisis has brought onto firms up and down the country, and around the entire world. If no such scheme had been brought in by the government, people would be in uproar, businesses would be closing and people would be losing their homes.

 

So yes, the scheme has been positive.

 

However, we also understand that money does not simply grow on trees, and firms will have to pay their own way again, the sooner the better, if we want to save our economy from total annihilation.

 

As we have said all along though, the safety of staff must always come first.

 

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