UK confirms coronavirus jobs package to be scaled back by Oct

The UK government confirmed it was scaling back its coronavirus job retention scheme with businesses having to meet 20% of their wage bill for furloughed workers by October.

The UK government confirmed it was scaling back its coronavirus job retention scheme and businesses would have to meet 20% of their wage bill for furloughed workers by October.

Finance Minister Rishi Sunak announced the widely trailed announcement on Friday, saying that from August, firms would have to pay employer national insurance and pension contributions for staff remaining on furlough.

The would have to pay 10% of their wages in September, doubling a month later.

The scheme was implemented in March as a nationwide lockdown closed all-but-essential businesses in an effort to stymie the spread of the pandemic. Sunak opened the financial taps to avoid mass unemployment as firms shuttered operations.

Since then the wage bill has been running at £14bn a month for more than 8m workers.

The date on which furloughed staff could be brought back part-time was moved forward to July 1 in response to business lobbying. Firms will only be able to apply for the job retention scheme or furlough additional employees until 30 June.

Self-employed workers affected by the crisis would be able to claim a second grant, Sunak said, with those qualifying able to apply for another payment based on 70% of their monthly profits, up to a maximum £6,570.

Unite union general secretary Len McCluskey welcomed the package, but warned the economy faced massed unemployment unless support was provided for specific sectors, “especially aviation, manufacturing and hospitality”.

“We have to enable businesses to develop new products and build back demand while holding on to the skilled workforce that they have invested in over the years,” he said.

"Without such assistance, and soon, many businesses will simply shut up shop resulting in the mass unemployment the chancellor has sought to avoid these past two months. This massive, collective economic investment should not be for nothing. We therefore urge the government to bring forward the sort of support packages for UK business that we have seen implemented in our competitor economies like France, Germany and the US."

However, the Institute of Directors warned that a quarter of businesses using the scheme could go bust if they were forced to contribute to furloughed workers’ salaries from August.

IoD director general Jonathan Geldart warned of possible job losses, saying the “ugly truth is that if there’s no money coming in the door, many firms will be forced to make difficult decisions come August”.

“There is hope that as more areas of the economy return to work, more companies can keep people on board. However, despite best efforts, many firms simply won’t be able to work at full capacity for the foreseeable future, and there’s no magic wand to lift demand back up again.”