Changes to staff support furlough scheme in pipeline

6 May 2020

business man walking in front of glass building with palmtree reflection with suitcase while in phone

A preliminary announcement earlier this week, that Chancellor of the Exchequer Rishi Sunak may be seeking to make changes to the Coronavirus wage subsidy scheme for businesses, has been greeted with a call for caution by Saffery Champness.

The furlough scheme is believed to have cost around £8 billion as at 3 May, and the Chancellor, it’s understood, is keen not to have staff off work, at home, and at considerable cost to the public purse.

A number of options are thought to be up for consideration, including cutting back the 80% wage subsidy to 60%, lowering the £2,500 monthly cap on payments made through the scheme, or allowing furloughed employees to work part-time, with a portion of their salary being met by their employers. It is thought that changes to the scheme could be implemented in July.

The Chancellor is also reported to be considering plans to change the scheme for the self-employed, including a reduction in the cliff-edge trading profit maximum from £50,000 to £30,000. Applicants are yet to be able to claim, although the government has brought forward the opening of its new claim service to 13 May. Claims should be paid on 25 May, or within six working days of a claim.

Martyn Dobinson, a partner and a member of Saffery Champness’ Landed Estates and Rural Business Group, says:

“This needs to be a delicate and careful process. People need to return to work when it is safe to do so but, for many, working practices are likely to have dramatically changed. Much depends also on when schools return and the ability to adopt safe social distancing measures in the workplace, as well as other factors.  

“For many, their employers will have scaled down their businesses and what must be avoided is a precipitative rush towards mass redundancies.

“We anticipate an announcement by mid-May. Inevitably there will be casualties, and much depends on how soon the economy, in the broadest sense, can restart. Caution needs to be exercised with scaled measures introduced over time. That must be the way.”