Coronavirus Furlough Scheme Will End in September After Extension
Chancellor Rishi Sunak is expected to use his 2021 budget to announce that the coronavirus wage support system will be extended from April to the end of September.
The Coronavirus Job Retention Scheme (CJRS) – widely referred to simply as “Vacation” – was introduced in March last year and has been a key support mechanism for restaurant owners and their employees throughout the pandemic to protect hundreds of thousands of jobs regardless of the exclusion of tips.
An announcement from the Treasury Department tonight, Tuesday March 2, said the extension of the vacation meant “helping businesses and individuals through the roadmap and beyond”. The budget will be delivered tomorrow, Wednesday 3rd March.
Sunak himself said, “Now light at the end of the tunnel with a roadmap for reopening. So it is only right that we continue to help businesses and individuals in the challenging months ahead – and beyond.”
Prime Minister Boris Johnson’s plan to reopen the Roadmap announced last week says that restaurants, pubs, bars and cafes in London will be able to open to customers outside for the first time since before Christmas on April 12th. A month later, on May 17th, indoor dining and hospitality can resume, with intermingling of households restricted until June 21st. The government hopes companies will fully reopen with minimal restrictions on the coronavirus.
The extension of the vacation into the fall suggests that the government is not betting on an immediate economic recovery in all sectors this summer, although the hospitality industry is likely to be among the first to benefit from pent-up demand after the lockdown . After Sunak extended the vacation program five times in 12 months, he wants to make sure this is the last.
The system remains unchanged for the months of May and June. The government covers 80 percent of wages up to a value of £ 2,500 per month for those disabled (excluding the expensive national) due to the pandemic with insurance and pension contributions.) For the month of July, the government will ask employers to Contribute 10 percent of that 80 percent, in August and September to 20 percent.
“When the restrictions are relaxed and the economy starts to reopen, companies will be asked to work with taxpayers to contribute to the cost of paying their employees for hours not worked,” the Treasury Department said.
Expanding the program “beyond the point of fully reopening the sector is a welcome step,” said Kate Nicholls, UK Hospitality’s chief executive officer, in a statement. She added, however, that asking companies to contribute 10 percent from July was “a concern” and that continued employers’ social security contributions were “disappointing”.
“It will put unnecessary pressure on fragile companies once they get back on their feet,” said Nicholls.
For the self-employed, the Treasury Department has announced a fourth “SEISS grant”, which can be requested from April, and which amounts to 80 percent of the average three-month trading profit up to £ 7,500.
Starting with tomorrow’s budget, restaurants and the entire hospitality sector have waited for a status update on the four main areas of government support – decisions that will affect their short- and medium-term futures and likely determine whether they will reopen in the spring. Vacation was one. You are now waiting for news about renewals of the VAT cut, business rate vacation and the confirmation of a new grant package.
More about the budget tomorrow.