Furlough: Will Rishi Sunak extend furlough? Phased exit ‘crucial’ to save businesses

Sadiq Khan calls for the government to extend furlough scheme

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The furlough scheme has been crucial for businesses throughout the coronavirus pandemic, with businesses able to apply for payments to fund 80 percent of employees wages when they are unable to work. The current furlough scheme – also known as the Coronavirus Job Retention Scheme – is due to end on April 30, and businesses are urging the Government for clarity as the UK sets its sights on exiting lockdown.

Prime Minister Boris Johnson is due to set out measures to exit lockdown next week, with his so-called roadmap out of lockdown to be unveiled on Monday, February 22.

The key points will be getting children back to schools, dates for being able to socialise outdoors and perhaps the reopening of shops and pubs.

However, there has been no indication as yet for what will happen to the furlough scheme, or whether it will be extended yet again to aid businesses.

Many are awaiting the Chancellor Rishi Sunak’s budget announcement – due on March 3 – for more information on the next steps for the furlough scheme.

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Several experts have called for the Government to implement a “phased exit” from the scheme in order to help the industries most affected.

Charlie Wright, Director, Epos Now told Express.co.uk: “A phased exit from the furlough scheme will be critical to the recovery of the hospitality and retail industries, especially given that the likely continuation of social distancing may cause footfall to recover at a slower pace than anticipated.

“Restaurants, pubs and cafes also need urgent clarity from local authorities on the utilisation of outside space, potentially via the closure of roads or footpaths.

“This crucial step would allow businesses to safely leverage outdoor areas in order to increase footfall and revenue while adhering to distancing guidelines.”

However with the risk of coronavirus cases once more spiking, especially with the recent influx of highly contagious variants, and further restrictions/closures possible, above all, businesses need clarity about their future.

 Mr Wright added: “Even once permitted to reopen, businesses will have very little certainty regarding whether more severe restrictions could be reintroduced.

“In light of this, small businesses must have continued access to loans and grants so that they can invest in the technology and stock required to open up safely.

“This will be especially important given the fact that cash reserves will likely have been drained when preparing to reopen.”

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Analysis by the Institute for Fiscal Studies (IFS) and Citi Research has warned of the impact on households at the lower end of the income scale should the furlough scheme not be extended.

The study has said cutting support for businesses could see the unemployment rate rocket.

And so, the report suggests in his upcoming budget, Mr Sunak needs to slowly wean businesses off support while offering targeted aid.

IFS director Paul Johnson said: “In the recovery phase (Mr Sunak) needs to support jobs and investment, but also crucially needs to recognise and address the multiple inequalities exacerbated by the crisis.

“Fiscal policy should lean against the effects of looser monetary (Bank of England) policy which has again benefited the older and wealthier at the expense of the younger and poorer.”

There have been criticisms of the lack of clarity for businesses, with the wait until March 3 the cause of a stress for many.

Dawn Brown, HR expert MHR told Express.co.uk: “What most business leaders are facing, particularly those that have been decimated by the pandemic, is another period of uncertainty and stress.

“If the furlough scheme is not extended redundancies will be a huge concern.

“However, companies will also face a very real challenge of re-onboarding staff returning to work.

“Managing a smooth transition won’t be easy with staff having become disconnected from long periods of being on the side lines.”

When asked about a potential furlough extension, a Treasury spokesperson said: “We’ve invested more than £280bn throughout the pandemic to protect millions of jobs and businesses – and extended our self-employed and furlough schemes through to April so that people have certainty that help is in place.

“At the upcoming Budget the government will set out how we’ll ensure public services continue to receive the investment they need.”

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