Employers welcome UK government decision to extend furlough scheme

By Hal Williams

A DECISION to extend the British government’s furlough programme has been met with relief by UK employers.

The Chancellor of the Exchequer, Rishi Sunak, this week announced that the coronavirus wage subsidy scheme, initially planned to expire at the end of June, will continue until the end of October.

The decision follows pressure from employer groups to help limit job losses as the crisis grinds on. Jo Keddie, partner and head of employment at law firm Winckworth Sherwood, welcomed the news.

“Many will be glad of flexibility for part-time working as the job retention scheme enters its next phase,” she said, “although employers may still face some difficult practical choices as to how to put that into practice, and how best to balance furlough arrangements with part-time working.”

But not everyone is happy with the scope of the government assistance scheme. Radeep Mathew, of funding consultancy Leyton, called out a decision to exclude technology businesses which participated in US accelerator programmes from emergency packages.

“This is no time for politics,” he said. “Start-ups participating in US accelerator programmes have cross-border activity in their plans from the outset, and these support business growth. International competition is absolutely critical to ensure UK dynamism following lockdown.”

Simon Mayberry, senior associate at legal firm and Leyton subsidiary LexLeyton, said the measures provided vital assistance, and urged employers to consider how they can make use of the support scheme.

There are no plans to make changes to the wage subsidy programme: the government will cover 80 percent of furloughed workers’ pay, to a maximum of £2,500 a month, until July 31.

From that date, the scheme will continue with more flexibility to allow staff to return. Currently, furloughed employees are not allowed to work. From August employers will be expected to share the salary cost with the government. The scheme costs an estimated £14bn each month, and with 7.5 m workers on furlough, total costs could eventually rise as high as £80bn.

Mike Jackson, entrepreneur success director of business management consultant Tech Nation, expressed relief from his sector at the extension. “Many collaborative tech projects have sprung up in response to the pandemic,” he said, “and many tech companies have been crucial to help us navigate the coronavirus.

“This type of intervention has been invaluable to many of the UK’s tech companies who have struggled with cash flow.” According to a recent Tech Nation survey, 38 percent of UK companies have furloughed staff, but only six percent had made staff redundant, “which is significant”.