Will the furlough scheme be extended until the summer?
It’s a question that’s been asked many times over the past year – will the furlough scheme be extended?
Given Chancellor Rishi Sunak is due to settle the issue one way or another in his budget announcement on Wednesday, we explore when the furlough scheme is slated to end, the likelihood of an extension, and what furlough ending might look like.
When does the furlough scheme end?
The furlough scheme – officially known as the Coronavirus Job Retention Scheme – has been in place since the first national lockdown last spring, launching on the 23rd of March 2020.
The scheme was set up to help businesses retain their staff while they grappled with the economic impact of coronavirus, and sees the Government pay 80% of the wages of any employee placed on leave due to the effects of the pandemic.
As we approach the one-year anniversary of the furlough scheme being launched, businesses and employees are beginning to wonder how long the support will last.
While strict coronavirus restrictions continue up and down the country, impacting businesses across all sectors, furlough is currently slated to wrap up at the end of April this year.
Is the furlough scheme likely to be extended?
The furlough scheme being extended would follow a consistent pattern. The UK Government has already extended the scheme several times to help businesses cope with the ongoing effects of the pandemic.
The scheme was initially slated to run from its launch date on March 23rd until summer 2020. The deadline was then extended until October, extended further after England entered a second national lockdown in December last year, and pushed into March 2021 as the country came under lockdown number three after the festive period.
While there has been no official announcement that the furlough scheme will be extended this time around, continuing social restrictions, added to the ongoing vaccination programme, mean it’s widely expected that the scheme will continue beyond the current planned end date of the last week in April.
When will we find out whether furlough will be extended?
The Prime Minister has already hinted that the furlough scheme will be extended beyond the April end date, saying recently to Parliament that his Government won’t “pull the rug out” from under UK businesses.
Experts also believe that the furlough scheme will be extended, because it’s in the Government’s best interest to do so. The Resolution Foundation last week released a report that found nearly two million Brits hadn’t worked in at least six months, with a large proportion of that number facing losing their jobs if the furlough scheme ends too abruptly.
Businesses and employees won’t have to wait much longer to find out whether furlough will be extended, as the issue is expected to feature prominently in Chancellor Rishi Sunak’s Spring budget, which he will announce on Wednesday.
The Chancellor has already given an indication that he is willing to extend the scheme, confirming recently that he would do “whatever it took” to support businesses through this difficult time.
What happens if furlough isn’t extended?
The reason there have been so many furlough extensions in the past, and the reason it’s likely the Government will announce a further extension of the scheme on Wednesday, is due to the huge uncertainty that surrounds the scheme ending.
While the unemployment rate has already reached its highest level in three years during the course of the pandemic, that number could conceivably be even higher.
Given furlough scheme is currently subsidising the majority of the wages of millions of people in the UK, and the fact that many sections of the economy remain unable to reopen, furlough may be the only thing standing between millions of people and redundancy.
What if I still need financial support?
The pandemic has hit many people hard financially, shutting down industries and leaving people unable to earn through no fault of their own. Unfortunately, while work may have dried up, bills continue arriving through the letterbox.
If the pandemic has made money tight and you’re worried about spiralling debts, talk to Creditfix today on 0808 253 5706. We’re the UK’s biggest IVA provider, and our friendly team are trained to help people like you deal with their debt.