So far, the CJRS has helped 1 million employers across the UK furlough 8.4 million jobs.
The Chancellor of the Exchequer has announced changes to the #coronavirus Job Retention Scheme. Flexible furloughing is starting one month early and employers will only be asked to start contributing to furloughed salaries from September 2020.
Over the coming weeks, we can now take careful but deliberate steps to reopen our economy. Across the country, office lights will be turned on and windows thrown open. Work clothes and school uniforms will be pulled out of the wardrobe. Shops and factories will start to hum with activity.
As we enter this new phase, things will change. Businesses will need to become Covid secure to protect staff and customers. We will all need to stay alert as we go about our daily lives.And, as Britain returns to work, we need to adapt the emergency programmes we put in place to bridge through the crisis. Because of those programmes, our economic prospects are better than they otherwise would have been.
We have provided:
- tens of billions of pounds of tax cuts, tax deferrals, cash grants and discounted loans for businesses.
- income protection for millions of the self-employed
- a strengthened safety net to protect millions of our most vulnerable people
And our job retention scheme has now supported more than 8 million jobs and over a million businesses.
No British Government, Labour or Conservative, has ever done anything like this. I believe it has made a real difference. But as we reopen the economy, there is broad consensus across the political and economic spectrum: The furlough scheme cannot continue indefinitely.
Two weeks ago, I outlined the principles of my approach:
- the furlough scheme will remain open all the way until October
- we will ask employers to start contributing, as we also introduce flexible furloughing
- and employees will see no change to their level of support
As promised, I can provide more details today.
I believe it is right, in the final phase of this eight-month scheme… to ask employers to contribute, alongside the taxpayer, towards the wages of their staff. But I understand, too, that businesses and employers have been through an incredibly difficult time. So I have decided to ask employers to pay only a modest contribution, introduced slowly over the coming months.
June and July 2020 Status quo 80% grant plus Employer NI and banded pension
In June and July, the scheme will continue as before, with no employer contribution at all.
August 2020 – 80% grant but employers pay their NI and pension
In August, the taxpayer contribution to people’s wages will stay at 80%.
Employers will only be asked to pay National Insurance and employer pension contributions… which, for the average claim, account for just 5% of total employment costs.
September 2020 – 70% grant
By September, employers will have had the opportunity to make any necessary changes to their workplaces and business practices. Only then, in the final two months of this eight-month scheme, will we ask employers to start paying towards people’s wages.
In September, taxpayers will pay 70% of the furlough grant, with employers contributing 10%.
October 2020 – 60% grant
In October, taxpayers will pay 60%, and employers will contribute 20%.
November 2020 – the Scheme is closed
Then, after eight months of this extraordinary intervention…
…of the government stepping in to help pay people’s wages, the scheme will close.
Flexible furlough from 1st July
The biggest request I’ve heard from businesses large and small, right across our country, is to have the flexibility to decide what is right for them. So, to protect jobs, and help businesses decide how quickly to bring their workforce back, we are introducing a new, more flexible furlough. This is a critical part of our plan to kickstart the economy.
The financial security of the furlough scheme has been a relief for many, but at the same time people want to work. No one wants to be at home on furlough. No one wants to feel unable to contribute. So HMRC and the Treasury have worked hard to put the flexible furlough in place not from August 1st, as originally planned, but from July 1st – one month early.
From July 1st, employers will have the maximum possible flexibility to decide on the right arrangements for them and their furloughed staff. For instance, if you are watching at home and on furlough, your employer could bring you back two days a week.They would pay you for those two days as normal, while the furlough scheme will continue to cover you for the other three working days.
To allow us to introduce this new, flexible furlough from July 1st, we will need to close the old scheme to new entrants on June 30th.
Closure to new entrants – 30th June 2020
Employers wanting to place new employees on the scheme will need to do so by June 10th… to allow them time to complete the minimum furlough period before then.
Reopening the country and kickstarting the economy
…Today, a new national collective effort begins: to reopen our country and kickstart our economy.
- Around 40% of employers have not made a claim for employer NICs costs or employer pension contributions and so will be unaffected by the change in August if their employee’s employment patterns do not change.
- Many smaller employers have some or all of their employer NIC bills covered by the Employment Allowance so will not be significantly impacted.
- Around 25% of CJRS monthly claims are below the thresholds where employer NICs and automatic enrolment pension contributions are due, and so no employer contribution would be expected for these payments to furloughed employees in August.
- To enable the introduction of part time furloughing, and support those already furloughed back to work, claims from July onwards will be restricted to employers currently using the scheme and previously furloughed employees. The scheme will close to new entrants on 30 June, with the last three-week furloughs before that point commencing on 10 June.
- From 1 July, employers will be able to agree any working arrangements with previously furloughed employees.
- When claiming the CJRS grant for furloughed hours; employers will need to report and claim for a minimum period of a week, for grants to be calculated accurately across working patterns.
- The CJRS scheme will continue to operate UK-wide.
- If an average claim lasted 8 months, the total cost of employer contributions would represent around 5% of the gross employment costs an employer would have incurred had the employee not been furloughed.