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Furlough extended once more

Published: Tuesday 22nd December 2020

Furlough is being extended once more in response to the ongoing pandemic. The government’s salary subsidy scheme will run until the end of April 2021. The move is aimed at reducing the continued economic effects of the second wave of covid-19. The furlough scheme will see the UK government continue to contribute 80% of worker’s wages. The furlough scheme was originally scheduled to end in February 2021.

The words lockdown extended in bright colours to show furlough extended once more.

The decision for furlough to be extend the scheme was made by Chancellor Rishi Sunak. Speaking of the decision, he said: “We know the premium businesses place on certainty. Therefore, it is right that we enable them to plan ahead regardless of the path the virus takes. As such, we’re providing certainty and clarity by extending this support, as well as implementing our ‘plan for jobs’.”

When does furlough end?

The announcement is leading many to ask, ‘when does furlough end?’ The news comes after the Bank of England predicts the UK economy will shrink more than expected by the end of 2020. Therefore, the bank says it will keep interest rates at their lowest ever levels to support the economy and get people back to work. This economic drop is expected to continue for the first three months of 2021 at least. This, combined with approaching Brexit, is expected to cause severe economic disruption for many businesses. The UK Treasury Department has also extended its government-guaranteed business loan scheme until the end of March 2021 in response, as well as introduced its Kickstart scheme.

Temporary closed sign to highlight furlough extended once more.

Furlough numbers double since October

The second wave of the pandemic has caused furlough numbers in the UK to double. The Office for National Statistics has revealed approximately 5 million people were on furlough in the UK in November. This is double the 2.4 million people on furlough when the scheme was originally scheduled to end in October. As such, roughly 15.5% of the UK workforce are currently receiving government wage subsidies. However, the current figure is still below the peak of 8.9 million people registered for furlough in May 2020.

The furlough scheme is the UK government’s flagship response to the country’s worst economic recession in 300 years. The UK government’s budget deficit is predicted to reach £394bn this year. This is more than double the amount borrowed during the 2008 financial crisis. As such, the government recently introduced some austerity measures. These measures include pay-freezes for public sector workers and a reduction in international aid.

People helping others to represent furlough extended once more.

More needs to be done

Despite millions of people receiving furlough extended payments, millions of others have been left behind. This is because many people do not meet the strict furlough rules. This includes the many people people considered to be self-employed. This is on top of many furloughed jobs already being at risk. Highlighting the continued damage to the UK economy, redundancies continue to rise at their fastest rate. Business groups and union leaders have criticised this latest move, saying much more is needed. Anneliese Dodds, the shadow chancellor, said the chancellor had waited to the last minute before acting. She said: “Rishi Sunak’s irresponsible, last-minute decision-making has left the UK with the worst recession of any major economy.”


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