UK furlough scheme to end on 31st October
Since the beginning of the COVID-19 pandemic in March, the UK government has been paying the salaries of over 10 million workers to ensure their job security. Businesses are now expected to contribute 10% of the salary of furloughed workers as well as their pension and national insurance contributions, but on 31st October, the scheme will be brought to an end entirely.
Image by Niek Verlaan from Pixabay
Chancellor Rishi Sunak has been repeatedly asked whether he will extend the scheme to protect jobs and give businesses more time to recover from the financial impact of the pandemic. In all cases, he has ruled out extending the furlough scheme so, after the 31st October, it will be up to businesses to decide how they proceed.
Boris Johnson and the Bank of England have both supported the decision to end the scheme, saying that it is keeping workers suspended in unproductive jobs. Although many MPs and trade unions have challenged the decision, warning that it will lead to unprecedented mass job losses, the government holds firm on its position and it is clear that there will be extension to the scheme.
Opposition leader Keir Starmer is pushing for a system similar to the in place in France and Germany where businesses are rewarded for keeping people in part time work instead of making them redundant, and the government is topping up wages.
When the scheme ends, the government is proposing an alternative scheme to support businesses. Companies will be offered £1000 for every furloughed worker that is kept in employment until the end of January. They are also offering a £1500 grant for all 16-24 year olds that are given a six month ‘high quality’ work placement. Any businesses that provide apprenticeships will be awarded £2000 for any under 25’s that they take on until January. That figure goes down to £1500 for under 25’s.
This leaves businesses in a difficult position because, although some financial help is available, it will not be enough to cover the full salaries of employees. In the coming months, business owners will need to contact archimedia accountants or other similar accounting firms to audit their finances and look for ways to keep people in employment. Otherwise, mass redundancies will be likely.
It is unlikely that businesses will be in a financial position to avoid any redundancies when the furlough scheme ends on the 31st October and they will be forced to find new ways to operate with fewer employees. Many businesses are already redesigning job roles so they can adapt to the new normal and sustain their economic recovery in the wake of the pandemic.
The pandemic has hit all sectors hard and the financial recovery is expected to take a long time. Although the furlough scheme has prevented many redundancies over the past months, businesses will find themselves in a difficult position on the 31st October when it comes to an end because the alternative financial assistance that the government is offering will only cover a small portion of salaries.
