Furlough to be extended until end of September

Chancellor Rishi Sunak will extend the furlough scheme until the end of September in today’s Budget, which is expected to include a support package in excess of £20bn.

The scheme, which was initially due to end next month, will run in its current form until the end of June, and will phase out with employers gradually paying larger contributions into the autumn.

For the next three months, the Government will continue to pay 80% of wages up to a cap of £2,500. From 1 July, furloughed staff will continue to receive 80% of wages but employers will be asked to contribute 10% of the cost, rising to 20% from 1 August. National Insurance Contributions will be removed from the scheme.

The Chancellor will also announce a fourth and fifth round of the self-employment income support scheme, worth 80% of three months’ average trading profits up to £7,500 and extend its availability.

An extension of the business rates holiday and a £5bn grants scheme for the high street are also expected.

UK Hospitality CEO Kate Nicholls welcomed the furlough extension but added that it will mean it is “more important than ever” that the Government’s proposed full-scale reopening on 21 June goes ahead.

Nicholls said that expecting businesses to contribute to the scheme from July is a worry, and that the decision to remove NIC’s is “very disappointing”.

“Businesses are burning through their cash reserves and many will have exhausted them before they have a chance to reopen,” she said. “Not all businesses are going to be out of the traps instantly. It will take time for them to reopen and they will be racking up costs in the meantime.

“It is now more important than ever that the Chancellor delivers a wider package of support in his Budget statement. Extended furlough alone will not be enough to give businesses the support they need to survive the Spring and Summer, particularly if businesses are now incurring additional costs.”