Chancellor Rishi Sunak has extended the furlough scheme until the end of April 2021.
The Government will continue to cover 80 per cent of wages for those not working through to mid-Spring, in a move described as giving businesses and employees certainty into the New Year.
Led by retail, it can typically be the quietest quarter for many industries.
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Mr Sunak said: “Our package of support for businesses and workers continues to be one of the most generous and effective in the world – helping our economy to recover and protecting livelihoods across the country.
“We know the premium businesses place on certainty, so it is right that we enable businesses to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our Plan for Jobs.”
He has also confirmed the extension of the government-guaranteed Covid-19 business loan schemes until the end of March, which had been the latest furlough end date.
These changes come ahead of the Budget, which the Chancellor has confirmed will take place on March 3.
So far, furlough – or the Coronavirus Job Retention Scheme – has protected 9.6 million jobs across the UK with more than one million businesses accessing loans to help them through the crisis.
Business Secretary, Alok Sharma, said: “While our loan schemes have provided a vital lifeline to millions of firms across the country, we know that business owners need additional certainty as we head into the New Year.
Sunak takes to Twitter to announce the extension of the furlough scheme until end of April 2021
“Extending government-backed loan schemes will give companies right across the UK the finance they need to support, protect and create jobs as we build back better from the pandemic.”
The Chancellor said he would review the employer contribution element of the CJRS in January, but decided to bring this forward to allow businesses to plan ahead for the remainder of the winter and the New Year.
Employers will only be required to pay wages, National Insurance contributions and pensions.
Eligibility remains the same.
Responding to the announcement, Suren Thiru, head of economics at the British Chambers of Commerce, said: “Cashflow remains an urgent concern for many businesses, so the extension to the government-backed loan schemes is a common-sense step.
“However, it is concerning that many firms who bank with non-accredited lenders remain effectively locked out of these vital financial lifelines. Government, regulators and banks must work together to ensure that all eligible firms can access this support to help them weather this challenging period.
“Government must also be ready to further expand the existing grant schemes to ensure that as many businesses as possible get access to the support they need.”
Commenting on the extension of the furlough scheme until the end of April, colleague and BCC director of policy, James Martin, said: “The extension to the furlough scheme is a welcome move and will provide much needed certainly and support that many need to protect jobs and livelihoods.
“Over the coming months, the government should continue to listen to business and evolve it support measures with the on the ground impact of the pandemic. Further cashflow support will be needed for companies who are unable to operate for an extended period, or those who face reduced capacity or demand due to ongoing restrictions.”
Rain Newton-Smith, CBI Chief Economist, said: “In the middle of a tough winter, this will bring some much-needesuren thirud certainty and respite for businesses.
“Stable employer contributions and an extension to the Job Retention Scheme until the end of April will mean the scheme continues to protect people’s livelihoods.
“And with cashflow difficulties still at the forefront of the minds of many business owners, continued access to Government-backed loans through to Spring will bring great comfort.
“In early 2021, businesses will likely need clarity about the level of support beyond the Spring to build a bridge to economic recovery.
“Working with firms to evolve the furlough scheme, support cashflow and avoid cliff-edges in other schemes like tax deferrals, grants and business rates holidays, will be essential early in the new year.”
Are you employing people on furlough or are you an employee relying on the scheme? Tell us what the extension means to you in the comments section below