Furlough scheme extended to October – everything designers need to know

The chancellor’s billion-pound scheme will continue to support workers, but will soon shift to encourage a gradual return to work.

Rishi Sunak has unveiled plans to extend the Coronavirus Job Retention Scheme (CJRS) until the end of October.

The scheme was originally introduced back in March, in a bid to soften the impact of the global coronavirus pandemic on the UK’s economy. With an estimated 7.5 million workers from one million businesses having been supported by the package since its inception, the CJRS is estimated to be costing the Treasury around £14 billion a month.

Despite spiralling costs (some estimates suggest the total price tag for the package could run as high as £80 billion), this is the second extension of the scheme to date. And as the country begins to layout a roadmap out of the crisis, the chancellor took to Parliament yesterday to explain how the CJRS would be used to gradually ease the UK back into work.

“Flexible” part-time work as economy “reopens”

Until the end of July, the scheme will continue to run as normal supporting furloughed workers with a government-paid wage worth 80% of their usual earnings (up to £2,500 a month).

But from August, the initiative will shift to encourage employees back into the workplace as the economy “reopens”. Furloughed workers, who right now must not work in order to be eligible for the scheme, will from August be allowed to return to work part-time.

As social distancing measures continue to affect all areas of the economy, the government has predicted that not all staff employed by a business are likely to be needed full-time to begin with. Encouraging part-time work, therefore, is an attempt to get all employees back into work environments to some degree.

Employers will need to “share cost of paying salaries”

The change aims to provide businesses with “flexibility” as they reopen, but with it also comes an expectation that employers will begin contributing to furloughed staff members’ salaries.

Employers will “share with the government the cost of paying salaries”, Sunak said, suggesting that government support will eventually trail off, as some semblance of normality is restored in the coming months.

More details on the percentage contribution expected from employers will be announced toward the end of the month, the chancellor explained, but the ambiguity has left many worried for what lies ahead. As shadow chancellor Annaliese Dodds said: “The government must clarify today when employers will be required to start making contributions, and how much they’ll be asked to pay.

“If every business is suddenly required to make a substantial contribution from the 1 August onwards, there is a very real risk that we will see mass redundancies.”

Concerns from different industries returning to normal

Aiming to subdue fears, Sunak told the BBC that the Treasury would be taking on “the lion’s share” of the cost – leaving businesses to make up the rest up to 80% of workers’ wages.

But as different sectors of the British economy reopen at different rates, some businesses continue to be sceptical about making contributions to the scheme, and designers may wish to take note of where their client base is among all this.

The hospitality industry, for example, will not see a return to normal for months after lockdown is lifted – expecting these businesses to contribute to their furloughed workers wages when operating a significantly reduced service will likely raise issues here, and have a knock-on effect on those who do business with them, like designers.

Self-employed scheme opens for applications

Elsewhere, the government has announced that the Self-Employment Income Support Scheme (SEISS), the self-employed worker equivalent to the CJRS, has opened for applications today, supposedly weeks ahead of schedule.

Announced back in March, some weeks after the CJRS, the scheme promised parity between employees and the self-employed by similarly offering workers a government-paid wage worth 80% of their average monthly earning.

It did, however, draw criticism due to the fact money would not be paid out to applicants until June. With applications opening early today, money is expected to be in bank accounts by 25 May.

The news has been welcomed by freelancer advocacy groups, with the Association of Independent Professionals and the Self-Employed (IPSE) CEO Derek Cribb saying is was “very welcome that the government has managed to get this new scheme in place ahead of schedule, and that a section of the freelance community can now get the help they need early”.

To check you’re eligible to apply, head to the gov.uk website.

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