Chancellor Set To Cut Coronavirus Furlough Scheme

The Chancellor, Rishi Sunak is preparing to “wean” businesses and workers off the government’s furloughing scheme by cutting wage subsidies amid concerns that the nation has become “addicted”. Yesterday, he met with other government officials to discuss the options available in order to wind down the scheme from July.

This is part of an attempt to get people back to work when the lockdown is eased. Plans include cutting the 80% wage subsidy and lowering the £2,500 cap on monthly payments. The Treasury is also considering plans to bar self-employed workers with trading profits of more than £30,000 from claiming government grants. At present the threshold is £50,000. This will be determined on a sector-by-sector basis as the lockdown is eased.

The scheme has been branded unsustainable, and addictive, with the government potentially spending as much on furloughing as it did on the NHS. Mr Sunak has been clear that there should be no panic as there won’t be an abrupt end to the furloughing scheme in response to concerns that it could lead to mass redundancies. They will make sure to wind down the scheme in a “measured way”. In our previous article HERE you will see that the scheme has been extended until June 30th.

Secretary of State, Matt Hancock stated “We need to get people safely back to work so we can withdraw from that scheme. It’s been very successful at keeping jobs and firms alive during this incredibly difficult time but we’ve also got to wean off it as the economy gets back on its feet. It’s a really difficult balance.”

The Liberal Democrats have also called for a “tapered” end to the programme, with the Treasury paying 50% of salaries for the first month after people return to work, falling to 30% after the third month, and employers paying full salaries by the fourth.

 

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