The government’s decision to extend the Job Retention Scheme until 31 March 2021 has been welcomed by industry leaders as a necessary safeguard to protect jobs over the winter.
The extended furlough scheme will continue to operate in the same way, with employees receiving 80 per cent of their current salary for hours not worked (up to a maximum of £2,500). The government is set to review the policy in January.
Announcing the measures on 5 November, Chancellor Rishi Sunak said:
“It’s clear the economic effects are much longer-lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support. Extending furlough and increasing our support for the self-employed will protect millions of jobs and give people and businesses the certainty they need over what will be a difficult winter.”
Rain Newton-Smith, Chief Economist at the CBI, commented:
“The Chancellor has built a bridge for business to Spring 2021 and taken much-needed steps to help firms across the UK survive this winter. Extending the tried and trusted Job Retention Scheme will give companies the certainty and stability they need to help safeguard thousands of jobs into March. Sectors and supply chains under the greatest strain may need more tailored support in the coming weeks.”
According to a recent national survey by Make UK, more than a third of manufacturers believe lockdowns are their biggest concern in the next 12 months. A similar number believe it will take longer than 12 months before ‘normal trading’ resumes.
Stephen Phipson, Chief Executive of Make UK, said:
“The Chancellor has said that he would work hard to protect jobs and [his] statement marks a welcome and significant step forward as we deal with the ongoing uncertainty across the whole economy, not just those regions that have been under tighter restrictions for some time.”
Jonathan Geldart, Director General of the Institute of Directors (IoD), added:
"Extending furlough is the right call from the Chancellor. This will give directors much greater confidence about their ability to keep staff on board through the winter. To support as many jobs as possible through the crisis, consistency and clarity is vital. Businesses need the ability to plan ahead, with cashflow being critical through the first quarter of 2021 particularly in light of potential Brexit impacts. The more information government can provide on support for the rest of the year, the better position organisations will be in.”