Chancellor Rishi Sunak today confirmed that the furlough scheme will be coming to an end as planned in October.
In doing so he launched a wage subsidy package which he said will support employees working in “viable” jobs.
To be eligible, companies must show how the employee is working one third of their usual, contracted hours and pay them for this. The treasury would then top up the remaining two thirds of the wage/
The Job Support Scheme will begin in November after furlough, which cost the UK tax payer nearly £40bn, comes to an end.
Sunak also launched a “pay as you grow” extension to the Bounce Back Loan scheme, giving businesses 10 years to repay them.
Treasury-backed business loans of £57bn have been already been handed out.
Speaking in the commons, Sunak said: “The government will directly support the wages of people in work, giving businesses who face depressed demand the option of keeping employees in a job on shorter hours rather than making them redundant.”
Sunak said that the country was in a ‘fundamentally different position to where we were in March’ and that there had been ‘no harder decision’ than to bring to an end to the furlough scheme.
As part of the wider plan, Sunak confirmed that VAT for hospitality and tourism businesses will remain at 5% until March 2021.
Speaking to the House of Commons today, Sunak detailed plans to keep the 5% VAT in place past the original cut-off date of January 12 next year, bringing hope to thousands of concerned hospitality firms.
It means that VAT for sector businesses, including food, accommodation and attractions will continued to be reduced from 20% to 5% for the next six months.