CHANCELLOR Rishi Sunak is reportedly considering topping up wages when furlough ends in October in a German-style scheme.
It comes after repeated warnings of mass unemployment and fears of a second coronavirus wave.
Rishi Sunak is considering a new plan to subsidise workers’ wages once furlough ends
In August, UK businesses had furloughed a whopping 9.6million workers.
Since then, employers have gradually been asked to contribute more and more to the scheme ahead of its end-date on October 31.
However, sources to both the The Guardian and the Financial Times claim the Treasury is considering new alternatives where wages are subsidised.
Although no decisions have been taken, one option on the table is that the Treasury and businesses share the cost of topping up wages of staff who can only be employed part-time due to the pandemic.
The Treasury is reportedly looking at whether it can subsidise the wages of employees who can work at least 50% to 60% of their normal hours.
The plan to subsidise wages would be similar to a wage subsidy scheme in Germany, where the government pays at least 60% of wages for the time an employee isn’t working.
Employers then pay staff for the rest of their usual hours if they are worked.
The plans are similar to proposals made earlier this month by the Trades Union Congress, which helped Mr Sunak draft the original furlough scheme in March.
The reports come after the Chancellor hinted that a new package of support could be on the cards last week.
At the time, the Chancellor vowed to be “creative” to find ways of helping people, and added that keeping people out of work isn’t the answer.
Just yesterday, the Bank of England governor Andrew Bailey said that it’s time to “stop and rethink” the furlough scheme ending for all, in favour of a targeted approach.
But he said he did not want to “tie the Chancellor’s hands”, adding “the world is changing rapidly around us”.
One industry source told The Guardian the Treasury is racing to announce a new support package before the start of October, when businesses are likely to start cutting jobs ahead of the end of the furlough scheme.
Employers planning to make fewer than 100 redundancies must run a 30-day consultation, meaning October 1 is the last point they could start this process if they intend on dismissing staff when furlough ends.
Companies can still make staff redundant after this date, but they’ll have to pay full wages from November 1 onwards.
A wave of job cuts have already taken place, with the travel, retail and hospitality industries among the hardest hit so far.
HOAR has contacted The Treasury for comment.
When the coronavirus jobs retention scheme first launched, it paid 80% of wages of furloughed workers – up to £2,500 a month.
Under the changes to the scheme, furloughed workers could then be brought back part-time from July.
From August, employers had to chip in to pay for national insurance and pension contributions for furloughed staff.
As of September 1, the government’s contribution fell to 70% of wages up to a cap of £2,187.50 a month.
And from October 1, the government’s contribution will fall to 60% of wages before the scheme ends on October 31.
