[UK] Budget will extend furlough until end of September

Later today chancellor Rishi Sunak will announce that the Treasury is extending its furlough scheme until the end of September in an attempt to safeguard jobs as the UK’s fragile economy comes out of the COVID-19 crisis, The Guardian reports.

In an unexpected move, Mr Sunak will say that workers will continue to be guaranteed 80 per cent of their salary for a further three months following the removal of all restrictions on activity which the government currently envisions carrying out in June.

Additionally, the chancellor will reportedly try to fend off accusations that too many people have slipped through the government’s salary safety net by announcing that an additional 600,000 of the newly self-employed will now be eligible for state financial help.

Hints had come from the Treasury in recent days that the furlough would be extended until the end of June, but Tuesday night’s surprise move will provide continuing support for sectors like hospitality and retail where recovery could be patchy and slow. (Link via original reporting)

“Our COVID support schemes have been a lifeline to millions, protecting jobs and incomes across the UK,” Mr Sunak said.

“There’s now light at the end of the tunnel with a roadmap for reopening, so it’s only right that we continue to help business and individuals through the challenging months ahead - and beyond.”

Under the new plan, employers will be expected to pay for 10 per cent of a furloughed worker’s wages in July, rising to 20 per cent in August and September. 

Mr Sunak said firms were being asked to make a “small contribution” to the hours not worked by their staff but employees will continue to receive 80 per cent of their wages (up to a £2,500 limit) until September.

In addition, cash grants under the self-employment income support scheme (SEISS) will now be available to those who became self-employed during 2019-20.

What will be in the chancellor's 2021 budget?

As well as the furlough and the SEISS, Mr Sunak is expected to announce:

• An extension of the £20 a week universal credit boost
• Extra measures to support the long-term unemployed through the Kickstart scheme for the under 25s and the Restart scheme for older workers
• An extension to the stamp duty holiday for properties under £500,000

The chancellor will say, “We’re using the full measure of our fiscal firepower to protect the jobs and livelihoods of the British people”.

But Mr Sunak also made it clear that he would take measures to repair the damage caused to the public finances by the coronavirus pandemic once the immediate threat was over and the economy was recovering. The chancellor has been strongly rumoured to be preparing for a rise in corporation tax from 19 per cent.

The Treasury will reportedly announce a series of tax consultations on March 23, Some have described this as a ploy to allow the chancellor to announce the “good news” about extensions of support on budget day and delay decisions on tax rises until later in the year.

Budget themes

In a trail of his Commons appearance, the Treasury said the budget would have three themes: “Support, honesty and building the UK’s future economy.”

The chancellor is expected to say, “First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis.

“Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that. And, third, in today’s budget we begin the work of building our future economy.”

Later today chancellor Rishi Sunak will announce that the Treasury is extending its furlough scheme until the end of September in an attempt to safeguard jobs as the UK’s fragile economy comes out of the COVID-19 crisis, The Guardian reports.

In an unexpected move, Mr Sunak will say that workers will continue to be guaranteed 80 per cent of their salary for a further three months following the removal of all restrictions on activity which the government currently envisions carrying out in June.

Additionally, the chancellor will reportedly try to fend off accusations that too many people have slipped through the government’s salary safety net by announcing that an additional 600,000 of the newly self-employed will now be eligible for state financial help.

Hints had come from the Treasury in recent days that the furlough would be extended until the end of June, but Tuesday night’s surprise move will provide continuing support for sectors like hospitality and retail where recovery could be patchy and slow. (Link via original reporting)

“Our COVID support schemes have been a lifeline to millions, protecting jobs and incomes across the UK,” Mr Sunak said.

“There’s now light at the end of the tunnel with a roadmap for reopening, so it’s only right that we continue to help business and individuals through the challenging months ahead - and beyond.”

Under the new plan, employers will be expected to pay for 10 per cent of a furloughed worker’s wages in July, rising to 20 per cent in August and September. 

Mr Sunak said firms were being asked to make a “small contribution” to the hours not worked by their staff but employees will continue to receive 80 per cent of their wages (up to a £2,500 limit) until September.

In addition, cash grants under the self-employment income support scheme (SEISS) will now be available to those who became self-employed during 2019-20.

What will be in the chancellor's 2021 budget?

As well as the furlough and the SEISS, Mr Sunak is expected to announce:

• An extension of the £20 a week universal credit boost
• Extra measures to support the long-term unemployed through the Kickstart scheme for the under 25s and the Restart scheme for older workers
• An extension to the stamp duty holiday for properties under £500,000

The chancellor will say, “We’re using the full measure of our fiscal firepower to protect the jobs and livelihoods of the British people”.

But Mr Sunak also made it clear that he would take measures to repair the damage caused to the public finances by the coronavirus pandemic once the immediate threat was over and the economy was recovering. The chancellor has been strongly rumoured to be preparing for a rise in corporation tax from 19 per cent.

The Treasury will reportedly announce a series of tax consultations on March 23, Some have described this as a ploy to allow the chancellor to announce the “good news” about extensions of support on budget day and delay decisions on tax rises until later in the year.

Budget themes

In a trail of his Commons appearance, the Treasury said the budget would have three themes: “Support, honesty and building the UK’s future economy.”

The chancellor is expected to say, “First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis.

“Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that. And, third, in today’s budget we begin the work of building our future economy.”