Having accepted furlough as a key part of our daily lives, particularly for the 9 million or so UK workers who are furloughed, the pressure has been growing on the Government to extend the Scheme beyond its current end date of 31 October 2020.
In his Summer statement a fortnight ago, Chancellor Rishi Sunak refused to extend the Scheme further, announcing instead a series of measures aimed at minimising the inevitable economic shock when the current furlough scheme ends.
So will you take a chance and keep hold of your staff, and delve into your financial war chest?
Of course some businesses will make full use of the Government schemes, but not all. There were three main incentives relevant to employers:
- A £1,000 bonus for each furloughed employee brought back to work and retained through to the end of January 2021. The employee will need to earn an average of at least £520 per month through to the end of January 2021. These bonuses will be paid from February 2021. It is believed that this bonus will be available for the employer to use as they wish, with it not needing to be paid in whole or part to the employee. The Government is trying to encourage employers to take back their staff from furlough, rather than make them redundant with the cost that would then add to the public purse. Whether it will be enough of an incentive remains to be seen. Some large employers have already come out and said they will not be claiming the bonus - Primark being the first, with others including John Lewis and William Hill expected to follow. Further detail on this Scheme is expected in the coming days.
- A government funded work placement Kickstart scheme for those aged 16-24 who are on Universal Credit. If these individuals carry out work placements, the Government will fund up to 25 hours per week of cost at the national minimum wage rate. Employers are free to top this payment up if they choose to. This Kickstart Scheme opens for applications in August and covers placements for up to six months.
- An investment of £1.6bn to scale up employment support schemes, and to encourage greater use of training and apprenticeships. Businesses will be given £2,000 for each new apprentice they take on aged under 25. For apprentices taken on aged 25 or over, employers will be paid £1,500.
These three schemes are estimated to cost the Government around £13bn, and are part of an overall £30bn package of support individuals and businesses are offered as part of phase 2 of the Government’s economic recovery plans. Whether these measures will have the desired effect in helping avoid the highest UK unemployment levels since the 1980s remains to be seen.
And to complete the Monopoly theme, Rishi's announcement also sought to stimulate the residential property market, with no stamp duty on purchases of up to £500k - so whilst your one bed flat purchase in Old Kent Road may be affected, the penthouse you were thinking of buying in Mayfair will not.