UK Government to Pay 22 Percent of Workers’ Wages When Furlough Ends

The government will cover 22 percent of workers’ wages in “viable jobs”, the Chancellor of the Exchequer Rishi Sunak has said.

In a speech to the House of Commons today, Sunak announced a “Job Support Scheme” to replace the furlough scheme on the 1st of November. It will subsidise the pay of employees who are able to work at least a third of their contracted hours. Companies with workers who are unable to return to work during the pandemic will not receive government subsidies.

“We need to create new opportunities and allow the economy to move forward and that means supporting people to be in viable jobs which provide genuine security,” said Sunak. “As I’ve said throughout this crisis, I cannot save every business. I cannot save every job. No Chancellor could. But what we can and must do is deal with the real problems businesses and employees are facing now.”

Under the new scheme, eligible workers will work a third of their contracted hours. Thirty-three percent of their wage will be paid for by their employer as normal. The government will pay a third of the remaining unworked hours – equivalent to 22 percent – which the employer will match. This means that the worker will receive 77 percent of their usual monthly wage.

The scheme will be open to all small and medium-sized businesses, but large companies must prove that their turnover has fallen by a third in order to qualify for the scheme. The support will last for six months.

“The primary goal of our economic policy remains unchanged: to support people’s jobs,” Sunak said. “But the way we achieve that must evolve.”

The Chancellor also outlined policies to aid two sectors that are among the hardest hit by coronavirus: hospitality and tourism. In July, the government announced a cut to VAT for food, accommodation and attractions – down from 20 percent to 5 percent. Today, Sunak said that VAT will remain at 5 percent until the 31st of March.

The self-employed grant will also be extended, but Sunak did not announce additional support for the many freelance workers not eligible for the scheme. There was also no mention of an increase to Universal Credit payments, or support for renters, who have been badly affected by the pandemic.

The announcement comes in the wake of stark warnings about the rise in coronavirus cases across the UK, as well as tightened social distancing regulations.