Sunak extends Self-Employment Support Scheme and confirms furlough next steps

By Tim Le Couilliard, Newgate Public Affairs

The Chancellor Rishi Sunak delivered today’s Downing Street briefing, setting out changes to the furlough scheme which will see employers required to bear some of the cost and set out a new “flexible-furlough” to allow people to return to work part-time.  However he was clear the Job Retention Scheme which currently supports 8.5 million workers “cannot continue indefinitely”, signalling the scheme’s closure in October. 

He said that over the coming weeks and months, as “office lights are turned on and windows thrown open”, businesses will have to become “Covid-secure” as people remain “alert”. Sunak announced that, because of the emergency programmes, the economic prospect of the country is better than it “could have been otherwise”, as the support scheme has protected over a million jobs and businesses. 

Saying that it is both “right and fair”, Sunak announced that employers will begin to have to pay towards the wages of their staff. Noting that businesses have been through an “incredibly tough time”, Sunak is calling for a “modest contribution, introduced slowly in the coming months”. In June and July, the scheme will continue as before. In August, the scheme will remain the same, with the same contribution from the taxpayer, but with employers now required to pay national insurance and employer pension contributions (which, for the average claim, costs about 5% of total employment costs). 

By September, which Sunak was keen to point out marks the final two months of the eight-month scheme, employers will start paying towards wages. In September, taxpayers will pay 70%, whilst employers will pay 10%. In October, taxpayers will pay 60%, employers 20%. Then, after eight months, the scheme will close. 

Alongside, a “flexible-furlough” is being introduced from 1^st July, a month earlier than planned and intended to “kick-start the economy”. Employees are then able to be brought back part-time, and paid by their employer for their time worked, whilst the furlough scheme will pay the rest (still up to 80%). 

The current scheme, therefore, is being closed to new entrants on 30^th June. Employers, looking to place new employees on the scheme, will have to have done so by the 10^th June.  

There has been much speculation surrounding the self-employed aid grants that were due to expire this weekend – a scheme that 2.3 million self-employed workers are currently signed up to. Today, Sunak announced that the scheme is being extended, with applications opening in August for a second and final grant. Working in the same way as the first grant with a lump instalment, this support will cover three months’ worth of average monthly profits. The August scheme will support income at 70%, up to a total of £6,570. 

Otherwise, there will be no changes, or extensions to the schemes – which Sunak was keen to conclude and that he said continue to be some of the “most generous in the world” and “unmatched by any government in recent history”.