Furlough is coming to an end

Charlotte Allen
July 12, 2021

From the 1st July 2021, the government furlough scheme to support businesses through the pandemic, will start to wind down.

What support is available and what's changing?

Furlough was introduced in spring 2020, to stop people being laid off by their employers during lockdown.

The government paid 80% of the wages of people who couldn't work, or whose employers could no longer afford to pay them - up to a monthly limit of £2,500. This is now changing:

  • From 1 July, the government will pay 70% of salaries and employers will pay 10%
  • In August and September, the government will pay 60% and employers will pay 20%

The monthly limit of £2,500 will stay in place, so workers will not notice the difference.

But by making furlough more expensive for employers, the government hopes to encourage them to take workers back full-time if they can. Employers already have to pay pension and National Insurance contributions.

What has furlough cost?

The government says 11.6 million jobs have been supported since the scheme began.

From March 2020 to the end of September 2021, the cost of furlough will come to about £66bn, according to estimates from the Office for Budget Responsibility.

However, the scheme has undoubtedly helped to save millions of jobs.

At the start of the pandemic it was feared that more than one in 10 workers would become unemployed.

Instead the unemployment rate is currently less than one in 20.

How many people have been furloughed?

  • About 2.4 million were on furlough (down from a peak of 5.1m in January
  • About 30% of employers had staff on furlough, down from 35% at the end of April
  • There are now more men on furlough than women (1.2m men versus 1.13m women)
  • The food and drink sector saw the biggest reduction in the number of jobs on furlough in May (down 313,000)
  • Air travel and tourism jobs saw the highest rate of jobs being put on furlough in May

Will furlough be extended again?

Furlough has been extended four times already, causing much confusion. One of the reasons it was extended to 30 September - long past the expected end of lockdown - was to give businesses certainty and prevent the need for yet another extension.

Boris Johnson and Chancellor Rishi Sunak both said recently that they do not want to extend furlough again. "On the basis of what we can see now in the data... we don't think we'll need to change," the Prime Minister recently said.

But if the data changes, and a large new wave of infections leads to further restrictions, the government will come under a lot of pressure to reconsider.

Further details about furlough and the changes to the CJRS can be found on the Government website.

If you have any questions or we can help you with any COVID-19 business support please get in touch. Email the team hello@thebusinesshut.co.uk or call 01858 289 189. You can also refer to our Accounts page for more information about we can support your business.

Thanks for stopping by,

Charlotte & The Business Hut Team

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