Chancellor Rishi Sunak has confirmed plans to axe the furlough scheme and replace it with a German-style wage subsidy plan. The furlough scheme will end on the 31st of October and the new job support scheme will take effect from November.

Taxpayers will no longer pay part of the wages of the estimated 3m people who were unable to work. The Treasury has now announced the new plan to help those who work at least a third of their normal working hours. Workers who are unable to work any hours will not be eligible for the new job support scheme.

It is not possible to say how many jobs the new wage subsidy scheme can save as the chancellor said: “I cannot save every business. I cannot save every job.”

The new scheme is created to move the responsibility of supporting workers, whose jobs were affected by the coronavirus lockdown, from taxpayers to employers.

This is not good news for many employees as it is likely they will lose their jobs. Many businesses and companies that have suffered as a consequence of the lockdown will not be in a position to support all employees.

Officials estimate that 2m to 4m workers will benefit from the new subsidy scheme. They also estimate this scheme will have a monthly cost of £300m for every 1m employee.

Supported workers will gain their pay for the hours worked from their employers. For the rest of the hours, their employers and the government pay a third of the wages each. The final third is unpaid.

It was also announced by the chancellor that restaurants, cinemas and hotels will continue to pay 5 per cent tax, rather than the usual 20 per cent. This is to help these sectors to stay open and keep employees.

The government is also providing some support to self-employed people. However, it’s a huge drop from the 80 per cent of the average monthly trading profit support. It is now only 20 per cent of the average monthly trading profit that self-employed people will get.

Leave a Reply

Your email address will not be published.