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Business / Business news

Furlough scheme and coronavirus business support loans extended

by Press Association
December 17 2020, 2.39pm Updated: December 17 2020, 7.24pm
Chancellor Rishi Sunak leaves Millbank broadcasting studios in Westminster (PA)
Chancellor Rishi Sunak leaves Millbank broadcasting studios in Westminster (PA)

The furlough scheme will be extended for another month, Chancellor Rishi Sunak has announced.

The scheme was due to expire at the end of March but the extension suggests the Government believes the economy will still be struggling to cope with the impact of the coronavirus pandemic.

Mr Sunak also extended Government loan schemes until the end of March to help support businesses.

The Chancellor said: “Our package of support for businesses and workers continues to be one of the most generous and effective in the world – helping our economy to recover and protecting livelihoods across the country.

“We know the premium businesses place on certainty, so it is right that we enable them to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our plan for jobs.”

Mr Sunak also announced that the next Budget will be on March 3, 2021.

Under the furlough scheme the Government will continue to pay 80% of the salary of employees for hours not worked until the end of April.

Employers will only be required to pay wages, National Insurance Contributions (NICS) and pensions for hours worked; and NICS and pensions for hours not worked.

The business loans schemes had been due to close at the end of January.

The schemes, which will now stay open until the end of March are: the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme (CBILS), and the Coronavirus Large Business Interruption Loan Scheme (CLBILS).

The schemes have helped keep the economy on life support but have added to the eye-watering cost of the pandemic to the public purse.

Official figures showed that £46.4 billion of furlough payments under the Coronavirus Job Retention Scheme had been claimed for 9.9  million jobs in 1.2 million firms since it was set launched in April.

So far £43.5 billion of bounce back loans have been provided to businesses.

Around £19.6 billion has been made available under the CBILS and almost £5 billion in CLBILS, which is for larger companies.

Labour accused Mr Sunak of waiting until the “last possible minute to act” – “leaving businesses in the dark with less than 24 hours before they have to issue redundancy notices”.

Shadow chancellor Anneliese Dodds said: “Rishi Sunak’s irresponsible, last-minute decision-making has left the UK with the worst recession of any major economy.”

Shadow chancellor Anneliese Dodds
Shadow chancellor Anneliese Dodds (Yui Mok/PA)

But the extension was welcomed by industry groups, including the British Beer and Pub Association whose chief executive Emma McClarkin described it as a “hugely positive move”.

However, she urged the Government to “turn its focus to a support package to protect hospitality businesses as well as committing to a roadmap out of this crisis in line with the vaccine rollout”.

“Pubs and brewers need enhanced grant support, extended business rates holidays and VAT reductions and a cut to the rate of tax on beer,” she said.

“It is only with that kind of backing that Britain’s brewers and pubs will be in a position to reopen, continue to employ all those staff currently furloughed and help lead the much-needed economic recovery.”

The Confederation of British Industry (CBI) said the extension would bring “some much-needed certainty and respite” for businesses.

Rain Newton-Smith, the organisation’s chief economist, said: “Stable employer contributions and an extension to the Job Retention Scheme until the end of April will mean the scheme continues to protect people’s livelihoods.

“And with cashflow difficulties still at the forefront of the minds of many business owners, continued access to Government-backed loans through to spring will bring great comfort.”