Chancellor Rishi Sunak set to stop new entrants to furlough scheme

26 May 2020, 19:34

Rishi Sunak is set to make the announcements this week
Rishi Sunak is set to make the announcements this week. Picture: PA
Maddie Goodfellow

By Maddie Goodfellow

Chancellor Rishi Sunak is set to announce this week that companies will soon be banned from adding new employees to the government furlough scheme.

Rishi Sunak is set to unveil details of the contributions the government will require from employers for the extension of the job retention scheme from the start of August.

According to the Financial Times, he is also expected to unveil the rules on extending it to furloughed employees returning to work part-time.

In order to prevent companies from furloughing full-time workers and bringing them back part-time, the Chancellor is expected to set a cut-off date for employees joining the scheme.

The government furlough scheme, which was created to mitigate the financial effects of coronavirus on UK businesses, is currently subsidising the wages of more than one in five British workers, meaning the government is paying the wages of 6.3 million people.

Under the Job Retention Scheme, 80 per cent of an employee's wages are paid by the state - up to a maximum of £2,500 a month.

The initiative has cost £8 billion so far.

Earlier this month, the Chancellor announced that the UK government furlough scheme will be extended until the end of October, with workers continuing to receive 80 per cent of their wages until August.

At the time, Mr Sunak explained: "From August to October, the scheme will continue for all sectors and regions of the UK but with greater flexibility to support the transition back to work.

"Employers currently using the scheme will be able to bring furloughed employees back to work part-time and start sharing the cost with the government of paying people's salaries."

It has been reported that the Chancellor is considering how to wind down the Government's coronavirus furlough scheme as concerns over spiralling costs rise.

Concerns have been raised over the cost of the coronavirus wage scheme with the Chancellor planning to scale back the scheme from July.

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