Sunak’s furlough take away: Chancellor announces update to furlough scheme


There is good news and bad news here. Chancellor Rishi Sunak has extended the furlough scheme at 80% of income up to £2500 per month right through to the end of March 2021. This will be welcome news to employers facing lockdown 2 woes in England and some relief for the devolved nations too, however there was a sting in the tail for many businesses that have been able to ride out the storm.

Firms which furloughed workers during the first wave of Covid have been banking on the £1000 retention bonus for each furloughed employee still working at the end of January 2021. Sunak has now taken this away to help fund the second furlough scheme. There will now be no retention bonus.

Many employers had been planning to divide out this payment amongst staff who worked the whole way through the pandemic, and instead of sharing the windfall now find themselves having promised a windfall to staff they will instead have to fund themselves. Other firms have factored the payment into their 2021 budgets and will have to cut expenditure elsewhere to plug the gap.

A further sting in the tail may be the promised January review of the cost of the Furloughing where Sunak has placed employers on notice that he may look to them to shoulder more of the financial burden for the Q1 2021 leg of the scheme.

These moving goalposts make it difficult for business to plan ahead, promoting excessive caution that may be counterproductive to jobs retention.


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