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AFP
May 31, 2020

UK tells firms to pay into virus furlough scheme from August

Business

AFP
May 31, 2020

London: Britain on Friday announced companies must start paying towards the wages of staff furloughed during the coronavirus pandemic from August, while self-employed workers will be eligible for a second and final grant.

Finance Minister Rishi Sunak said employers will need to pay social security contributions from August, 10 percent of wages in September and 20 percent in October, before the government´s furlough scheme ends.

Launched in March, it allows employees to receive 80 percent of their pay up to £2,500 ($3,100, 2,800 euros) a month and was extended until October earlier this month.

In addition, Sunak said the self-employment income support scheme will continue into August, when freelancers can apply for a second grant of up to £6,570.

The scheme, which pays three months´ worth of average monthly profits, has so far seen 2.3 million claims worth £6.8 billion (7.5 billion euros, $8.4 billion).

Individuals could claim up to £7,500 under the first grant, which launched earlier this month.

The changes come as the government eases the country´s virus lockdown introduced in late March, with people being urged back to work earlier this month, and some schools and shops set to reopen next week.

"As Britain returns to work, we need to adapt the emergency programmes we put in place to bridge through the crisis," Sunak said as he unveiled the reforms at the daily Downing Street briefing.

"There is broad consensus across the political and economic spectrum: the furlough scheme cannot continue indefinitely."

Sunak also announced that firms would be allowed to return workers part-time from July without risk of losing out financially, rather than August as had initially suggested.

He added the "new, more flexible furlough" was a key part of the government´s plan to "kickstart the economy".

Some 8.4 million workers at around one million companies in Britain have benefitted from the scheme, so far costing the government £15 billion.

Many company bosses have voiced fears that their finances could be too fragile to cope without it later this year.

A report Thursday by the Institute of Directors business lobby group showed that a quarter of companies believe they cannot afford to pay the 20 percent furlough contribution.

However, the Confederation of British Industry (CBI), welcomed the announcement, following reports the support measures could be wound up even faster.

"Firms understand the scheme must close to new entrants at some point and that those using it in future will need to make a contribution to help manage the costs," CBI Director-General Carolyn Fairbairn said.

But she warned that firms unable to open until later in the summer, particularly in leisure, hospitality and the creative industries, may need further assistance.