Sunak holds firm as furlough winds down amid warning
Some firms may not survive the end of furlough
Chancellor Rishi Sunak is showing no sign of succumbing to pressure for the furlough scheme to be continued, despite warnings of rising redundancies.
From today 450,000 employers have to pay 10% of their furloughed workers’ pay and from August this rises to 20%, continuing through September before the scheme is withdrawn.
The Institute for Fiscal Studies, which is forecasting a surge in job losses over the summer, said it will cost businesses £322 this month, rising to £489 in August and September, to retain an employee earning £20,000 a year.
Labour says the payments amount to a combined £225 million bill for British business just as it is getting back on its feet.
Liberal Democrat Treasury spokesperson Christine Jardine warned: “How are businesses supposed to have confidence in a Government that promised to do whatever it takes, but is withdrawing support too soon? Now thousands of businesses are being left facing reduced support while still unable to operate fully to pay their bills.
“This gap before the next possible lifting of restrictions could be crucial for many of them.
“Bounce back loans are creating an extra burden and the Government needs to come up with a way of making that easier to repay.”
The Federation of Small Business pointed to new figures from HMRC showing that close to one in three employers will be hit by changes to the furlough scheme from today, the same moment at which repayments of deferred VAT start to fall due and business rates exemptions for hardest-hit firms are lost.
Between 1.3m and 1.9m people are still on furlough, according to the Office for National Statistics, though the number is falling sharply. One million people were no longer supported by the scheme last month.