BUSINESSES will have to start paying up to 20% of furloughed employees' wages by October, Rishi Sunak has confirmed.
The Chancellor set out his plan for winding down the Government's Job Retention Scheme (JRS) today during the afternoon coronavirus briefing.
He said by the end of October the scheme, as well as support for the self-employed, will have cost £100bn in total.
From August, companies will be required to pay national insurance and pension contributions for their furloughed workers, and the following month they will be required to pay 10% of their wage as well.
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In September the government will decrease its payment to 70% of wages, and by October firms will be expected to increase their contribution to 20%, while the Government decreases its share to 60%.
For self-employed people, they will be able to access a second grant equal to 70% of their average earnings over three months based on their last tax return. It will be capped at £6750.
The Chancellor has faced repeated calls to ensure the scheme to support self-employed people during the crisis is as equally generous as that for those employed by companies.
Mr Sunak said: "Across the country, office lights will be turned on and windows thrown open. Work clothes and school uniforms will be pulled out of the wardrobe. Shops and factories will start at hum with activity. As we enter this new phase things will change. Businesses will need to become Covid secure to protect staff and customers.
"We will all need to stay alert, as we go about our daily lives and as Britain returns to work we need to adapt to the emergency programme we have put in place."
He added: " I do want to acknowledge that we haven't been able to support, everyone in the exact way, they would want.
"I understand some people have felt frustrated. You will not and have not been forgotten."
Along with the funding announcements, Mr Sunak said from July 1 employees would be allowed to return to work part time and still be eligible for furlough payments on the days they are not working.
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He said the "flexible furlough" was a "critical part of our plan to kickstart the economy", but said employers would have to enrol any new furloughed staff by June 10 to be eligible.
While the extension of the scheme has been welcomed by many business leaders, others are fearful they won't be able to pay anything towards salaries if they are not able to open.
It has sparked fears over a rise in unemployment rates and business closures.
A Treasury spokesman said: "The way we look at it is, how many people would not have had their jobs protected if we hadn't done this.
"The Chancellor has always been clear, including in the speech he gave towards the end of March when he launched the scheme, that we can't protect every job because we will be in a very deep recession in the next quarter."
When pressed on whether the department had done any analysis or modelling of employment rates as a result of the furlough policy, he said: "There are estimates out there that you would have seen on potential rates of unemployment.
"They all depend on scenarios for how long this goes on for. But, to be clear there are and will be many more people made unemployed as a result of this recession."
Dr Liz Cameron, Chief Executive of the Scottish Chambers of Commerce said the issue for Scottish firms was that the Chancellor's announcement did not correlate with the Scottish Government's roadmap out of lockdown.
She said: " Businesses are mindful that the Coronavirus Job Retention Scheme has cost billions and the pot of money to support employers and the economy is not unlimited. This has been a lifeline for the majority of Scottish businesses preventing a mass tsunami of people losing their jobs.
“The big challenge for Scottish businesses is that the UK government’s new tapered approach to the furlough scheme is not aligned with the Scottish Government’s roadmap out of lockdown. This misalignment will affect crucial areas of the economy such as tourism which are forced to close for longer.
“Before tapering hits, we need to ensure all sectors of our economy are able to generate trade so they are able to pay employees. Currently there is still a lack of clarity for businesses in Scotland over when they can re-open. We urge the chancellor to adopt measures to ensure that businesses facing ruin as the furlough scheme tapers aren’t forced to fall at the last hurdle.’’
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