• Noel Aloko

Furlough scheme extended

Chancellor Rishi Sunak confirms the furlough scheme will be extended across the UK until the end of March.

Mr Sunak said the scheme will pay up to 80% of a person's wage up to £2,500 a month. He told the Commons that the government will review the policy in January.

The chancellor said his intention was "to give businesses security through the winter".

"The security we are providing will protect millions of jobs," he added.

The furlough scheme subsidises the wages of people who cannot do their jobs, either because their workplace is closed, or because there is no longer enough work for them.

Mr Sunak said it would apply throughout the UK, saying the country had "a Treasury for the whole of the United Kingdom".

Who can be furloughed?

Employees can be furloughed regardless of whether they are on full-time, part-time, agency, flexible or zero-hour contracts, but they must have been on the payroll by 30 October 2020. They do not need to have been furloughed before.

They can also take on other jobs while placed on leave, as long as it doesn't breach the rules of their existing contract.

Employees who were employed and on the payroll on 23 September who were made redundant or stopped working afterwards can be re-employed and be claimed for by companies.

While the government updates the system, employers will submit their wage claim to the government, and be refunded afterwards. After that, they will be paid upfront to cover the cost.

By 18 October, furlough claims had cost the taxpayer £41.4bn, with costs expected to rise to about £50bn.

What help are self-employed getting?

Following two support payments paid to cover a loss of income over the spring and summer, Chancellor Rishi Sunak has now confirmed a third grant for the self-employed on the same terms.

So, the taxable grant will cover 80% of profits for November, December and January, up to a total limit of £7,500 - paid in a single instalment. Applications will be open from 30 November for those who are eligible and have been affected by coronavirus.

The government's original plan was for this third grant to only cover 40% of average monthly trading profits, with a limit of £3,750 in total. This was then updated to cover 55% of trading profits, but just a few days later was extended again to 80%.

A subsequent - fourth - grant will cover a three-month period from the start of February 2021 until the end of April, with terms to be confirmed later.

Businesses will also continue to be able to apply to banks for government-backed support loans until 31 January, compared with a previous 30 November deadline for some of the programmes.

More support

At the same time, the chancellor raised guaranteed funding for the UK's devolved administrations by £2bn to £16bn.

The furlough scheme was due to end at the start of November. At the weekend, we found out it would last until 2 December. Now it's staying until the end of March.

The government will argue it is necessary because of a changing health picture.

On top of this, the government has announced:

  • cash grants of up to £3,000 per month for businesses which are closed worth more than £1 billion every month

  • £1.1 billion is being given to Local Authorities, distributed on the basis of £20 per head, for one-off payments to enable them to support businesses more broadly

  • plans to extend existing government-backed loan schemes and the Future Fund to the end of January, and an ability to top-up Bounce Back Loans

  • an extension to the mortgage payment holiday for homeowners

  • up to £500 million of funding for councils to support the local public health response.

Fraud worries

More than £50bn has been spent on the furlough scheme since it was introduced in March. It was originally intended to end in May, but Mr Sunak said at the outset that it would be extended "if necessary".

About 9.6 million people have benefited at one time or another, with a steep take-up in the first few months.  However, some have questioned whether all the money has been wisely spent.

HM Revenue and Customs, which administers the furlough scheme, has suggested that up to 10% of the money delivered by the scheme to mid-August - some £3.5bn - may have been paid out in fraud or error.

It is also unclear whether it has genuinely safeguarded viable jobs or merely delayed the inevitable disappearance of unviable ones.

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