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Furlough scheme extended until October


The government’s Coronavirus Job Retention Scheme will be extended until the end of October, Chancellor Rishi Sunak has announced.

Speaking in the House of Commons, Mr Sunak revealed furloughed workers across the UK will continue to receive 80% of their current salary, up to £2,500.

The news comes as the British economy slowly starts to reopen, with the scheme to now introduce new flexibility in a bid to get more employees back to work.

Originally set to close at the end of next month, the chancellor had faced pressure from employers groups to avoid a wave of job losses as the country continues to grapple with COVID-19.

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“I want to avoid a cliff edge…”

Today (May 12) Mr Sunak announced there would be no changes in the system until the end of July, with greater flexibility to get staff back to work expected in August.

Speaking of the extension, the chancellor said: “Our Coronavirus Job Retention Scheme has protected millions of jobs and businesses across the UK during the outbreak – and I’ve been clear that I want to avoid a cliff edge and get people back to work in a measured way.

“This extension and the changes we are making to the scheme will give flexibility to businesses while protecting the livelihoods of the British people and our future economic prospects.”

A staggering 7.5 million Brits are currently furloughed with one million businesses turning to the government for support to cover the cost of wages during the pandemic.

What changes will be introduced?

The chancellor advised there would be no immediate changes to the scheme.

Mr Sunak announced the government will continue to pay 80% of furloughed workers wages up to £2,500 per month, until the end of July.

However, although the scheme will continue for all sectors and regions until October, from August greater flexibility will be offered to firms to get staff back to work. This will allow employers the opportunity to bring furloughed employees back on a part-time basis.

August will also see employers required to “share with the government cost of paying salaries”, in the first hint that the level of state support could gradually reduce.

Mr Sunak didn’t detail how government support would be drawn back, however, did state there was an expectation that employers would make a contribution towards paying 80% of furloughed workers’ wages – ensuring staff wouldn’t have their incomes cut.

More information is expected about the implementation of the flexibility and employer commitments at the end of May.

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Additional support to be made available for workers

The latest update from the chancellor comes as the government mapped out its plan for the next phase of managing the COVID-19 outbreak.

As the Coronavirus Job Retention Scheme is extended across the country, the government will explore ways to continue to support furloughed workers interested in additional training or learning new skills.

The chancellor also stated that the government will also work with devolved administrations to ensure the scheme continues to support people across the union.

He said that the scheme is just one part of the government’s ‘world-leading economic response to coronavirus.’

New government statistics published today show businesses have benefitted from £14 billion in loans and guarantees to support their cash flow during the crisis. This includes 268,000 Bounce Back Loans worth £8.3 billion, £6 billion through the Coronavirus Business Interruption Loan Scheme and £359 million through the Coronavirus Large Business Interruption Loan Scheme.

However, despite not sharing news of a change to the self-employed support scheme, Mr Sunak said self-employed Brits could start to receive cash payments from the government to make up for lost earnings from “as early as next week.”

He said: “Those who are self-employed whose returns of earnings we are aware of are already being contacted, they will be able to apply from tomorrow (May 13) and they will receive cash in their accounts for a three-month grant from as early as next week.”


“The government must continue to keep a watchful eye”

Leaders of industry across the UK have hailed the extension of the job retention scheme as a positive step to help support the British economy.

Speaking of the news Mike Cherry, National Chairman of the Federation of Small Businesses said: “The Job Retention Scheme is a lifeline which has been hugely beneficial in helping small employers keep their staff in work, and its extension is welcome.

“Small employers have told us that part-time furloughing will help them recover from this crisis and it is welcome that new flexibility is announced today.”

The positive sentiment was echoed by Dame Carolyn Fairbairn, who added: “The chancellor is confronting a challenging balancing act deftly. As economic activity slowly speeds up, it’s essential that support schemes adapt in parallel.

“Extending the furlough to avoid a June cliff-edge continues the significant efforts made already and will protect millions of jobs.

“Introducing much-needed flexibility is extremely welcome. It will prepare the ground for firms that are reawakening, while helping those who remain in hibernation. That’s essential as the UK economy revives step-by-step, while supporting livelihoods.”

Ms Fairbairn continued: “Firms will, of course, want more detail on how they will contribute to the scheme in the future and will work with government to get this right.

“Above all, the path of the virus is unpredictable, and much change still lies ahead. The government must continue to keep a watchful eye on those industries and employees that remain at risk. All schemes will need to be kept under review to help minimise impacts on people’s livelihoods and keep businesses thriving.

“The greater the number of good businesses saved now, the easier it will be for the economy to recover.”


If you’re concerned about your finances and are worried about covering the cost of debt during this difficult time, talk to Creditfix. Our team is on hand to offer free advice on 0808 253 3299.

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