Chancellor announces furlough scheme extended to March

"We can announce today that the furlough scheme will not be extended for one month – it will be extended until the end of March. The government will continue to help pay people’s wages, up to 80% of the normal amount," said Chancellor Rishi Sunak on Thursday before the House of Commons.

This latest extension will mean that the furlough scheme will be around for a full 12 months. 

"We’ll review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more," said Mr Sunak. 

"Of course, as the furlough itself is now being extended to the end of March, the original purpose of the Job Retention Bonus to incentivise employers to keep people in work until the end of January – obviously falls away.

"Instead, we will redeploy a retention incentive at the appropriate time."

The Chancellor confirmed that for self-employed people, the next income support grant, which covers the period November to January, will now increase to 80 per cent of average profits, up to £7,500.

Mr Sunak also reassured the people of Scotland, Wales and Northern Ireland that the furlough scheme will remain around for "all the people of the United Kingdom, wherever they live".

"That has been the case since March; it is the case now; and will remain the case until next March," said Mr Sunak.

"It is a demonstration of the strength of the Union – and an undeniable truth of this crisis – we have only been able to provide this level of economic support because we are a United Kingdom."

Moreover, he announced that the upfront guaranteed funding for the devolved administrations is increasing from £14 billion to £16 billion. 

The furlough scheme was initially extended until 2 December. But the government is now going further so that support can be put in place for long enough to help businesses recover and get back on their feet – as well as giving them the certainty they need in coming months. Evidence from the first lockdown showed that the economic effects are much longer lasting for businesses than the duration of restrictions.

There are currently no employer contribution to wages for hours not worked. Employers will only be asked to cover National Insurance and employer pension contributions for hours not worked. For an average claim, this accounts for 5 per cent of total employment costs or £70 per employee per month.

The CJRS extension will be reviewed in January to examine whether the economic circumstances are improving enough for employers to be asked to increase contributions.