Covid Scotland: UK furlough scheme support to be reduced

The furlough scheme set up to help businesses through the pandemic is reducing its financial support from today.

Thursday, 1st July 2021, 7:13 am
Updated Thursday, 1st July 2021, 1:32 pm

Employers must pay 10 per cent of their furloughed workers' usual wage from 1 July, while the government will continue to pay the other 70 per cent.

It means staff will continue to receive 80 per cent of their wages.

With 1.5 million employees estimated to be on furlough across the UK, many businesses will feel the financial hit.

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The UK government has spent £66bn on the Coronavirus Job Retention Scheme, otherwise known as the furlough scheme, and it has supported 11.2 million jobs since March 2020, the BBC reports.

From 1 August, the employers' contribution rises to 20 per cent, with the government's contribution reducing further.

Older workers face a higher risk of unemployment as the furlough scheme is phased out, a new study suggests.

Furlough scheme starts to wind down from 1 July picture: Shutterstock

The Resolution Foundation said more than one in four workers aged 55-64 who were furloughed during the recent lockdown remained so in May despite the reopening of the economy.

There has been a rapid return to work in recent months, and a welcome boost to living standards, said the think tank.

The rapid fall in furlough rates has been driven by the reopening of sectors like hospitality and leisure, which disproportionately employ younger workers, according to the report.

Younger people have returned from furlough more quickly, resulting in older workers bearing the highest risk of being out of work longer, said the foundation.

Its research indicated that more than 600,000 workers aged 45-64 have been unemployed or on full furlough for at least six months.

The Covid-19 crisis is set to leave an unequal legacy on family finances, causing additional spending pressures for some, while others have saved by not spending on hospitality, leisure and foreign travel, said the report.

Karl Handscomb, of the Resolution Foundation, said: “Reopening the economy has led to a surge in people returning back to work from furlough, particularly young people in sectors like hospitality and leisure.

“But not everyone is back working. Over one in four older workers who were furloughed during the recent lockdown have remained parked on furlough during the reopening, and now face a higher risk of unemployment as the scheme starts to be unwound.

“It’s crucial that the Government does it all can to prevent rising unemployment among workers of all ages this autumn when the furlough scheme ends.”

Emily Andrews of the Centre for Ageing Better, commented: “Over 50s have been hit hard throughout the crisis, and it’s likely that that when the furlough scheme ends we will see many more people in this group facing redundancy.

“This is particularly worrying, because we know that over 50s struggle more than any other group to get back into work and there is a real risk that many will fall out of the workforce for good.”

Labour has called for support measures to be extended as long as restrictions to combat Covid-19 remain in place.

Shadow chief secretary to the Treasury Bridget Phillipson said: “It doesn’t make any sense given that we have had to delay the easing of restrictions because of the Government’s handling of the border problem to then expect businesses to be paying more at a point at which they’re at a really difficult time.

A Government spokeswoman said: “We deliberately went long with our support to provide certainty to people and businesses over the summer, and that support, which is a substantial amount of funding, is continuing with the furlough scheme in place until September.

“Recent statistics show there are 7.85 million workers aged 50 to 64 on payrolls – up 181,000 on the year.

“But as we recover from the crisis we’re also helping hundreds of thousands of older workers to retrain, build new skills and get back into work through our Plan for Jobs, including our 50 Plus: Choices Offer, the Sector-Based Work Academy Programme, and our Job Entry Targeted Support scheme.”

Additional reporting by PA

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