Chancellor to ask employers to pay 20% of workers' wages - reports

Chancellor to ask employers to pay 20% of workers' wages - reports
By: Business Posted On: May 29, 2020 View: 178

Chancellor to ask employers to pay 20% of workers' wages - reports

Chancellor Rishi Sunak is set to make an announcement on the furlough scheme, with reports suggesting employers will be asked to pay 20% of workers' wages as well as national insurance and pension contributions.

It is understood the government will pay 60% of each wage up to a cap of £2,500 a month from August, according to The Guardian.

Treasury sources did not deny the reports.

The chancellor will give an update today on how firms will be asked to contribute to employees' wages, following government concerns about the increasing costs of the furlough scheme and its likely impact on the UK public spending deficit.

Currently, employers are able to claim up to 80% of workers' wages and they are exempt from national insurance and pension contributions.

Around 8.4 million workers have been furloughed under the scheme, which has cost £15bn, while a separate scheme to support self-employed workers has cost almost £7bn.

The furlough scheme was launched in March and was initially supposed to last three months. It was designed to prevent lay-offs during the coronavirus pandemic.

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Environment Secretary George Eustice said people cannot be furloughed "indefinitely" and ways need to be found to get people safely back to work.

He told Sky News it had been "a very generous" scheme "to help people through these extraordinary times and to ensure that businesses' overheads could be covered".

But he cautioned: "We need to try to start to get bits of the economy back to work."

Businesses are grateful for the government's injection but need more cash, a report has revealed
Image: The furlough scheme could be shut to new entrants

While Labour's shadow home secretary Nick Thomas-Symonds urged: "The PM and the chancellor both said they would do whatever it took to get through this and people would not lose out for doing the right thing. They have to be held to that."

Last month, Mr Sunak said he would extend the existing scheme until July, but he has come under pressure from officials to make employers pay a larger contribution.

He is also expected to shut the furlough scheme to new entrants and prevent employers from rotating staff, reports say.

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The Labour Party has urged the chancellor to protect subsidies for the industries hit hardest by the pandemic.

Meanwhile, a cross-party group of MPs has written to the chancellor calling for the scheme supporting self-employed workers to be extended past Sunday.

Rishi Sunak explains the furlough extension
'We've extended the scheme for four months'

The group said these workers - who include many plumbers, hairdressers and TV workers - will be left "without work and without support" if the scheme is not extended.

While the furlough scheme for permanent workers has been extended until October, there have been no announcements on the self-employed scheme.

Siobhain McDonagh, the Labour MP who organised the letter, said: "This scheme is a lifeline for millions of locked-down workers right across the country.

"How can it be right for the furloughed scheme to continue but this scheme to not?"

Next week from Monday to Thursday, Dermot Murnaghan will be hosting After the Pandemic: Our New World - a series of special live programmes about what our world will be like once the pandemic is over.

We'll be joined by some of the biggest names from the worlds of culture, politics, economics, science and technology. And you can take part too.

If you'd like to be in our virtual audience - from your own home - and put questions to the experts, email afterthepandemic@sky.uk

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