Rishi Sunak announces furlough scheme extended until the end of March

5 November 2020, 12:23 | Updated: 5 November 2020, 14:10

The Government Furlough Scheme extended until March 2021

Chancellor Rishi Sunak today announced that the government's coronavirus furlough scheme will be extended until the end of March.

Payments will remain at 80% of people's wages, Mr Sunak confirmed in the Commons.

He said the Government's highest priority remains "to protect jobs and livelihoods".

In a major U-turn by the Government, the Chancellor said the move is needed because of the economic situation caused by the Covid-19 pandemic.

Making an economic statement in the Commons, the Chancellor told MPs: "The Bank's forecasts this morning show economic activity is supported by our substantial fiscal and monetary policy action.

"And the IMF just last week described the UK's economic plan as aggressive, unprecedented, successful in holding down unemployment and business failures, and one of the best examples of co-ordinated action globally.

"Our highest priority remains the same: to protect jobs and livelihoods."

He had previously extended the furlough throughout November due to the second national lockdown in England, having resisted calls from northern leaders in tier three areas to do so.

The furlough scheme which was originally due to wind down on 31 October.

One of the leaders who fought for a furlough extension, Steve Rotheram, the Liverpool City Region mayor, tweeted: "Today, the Chancellor is expected to extend 80% furlough past December and to Tier 3 areas - like @AndyBurnhamGM and I have been calling for.

"We've had to fight and scrap just to make them do what they themselves thought was the right thing 6 months ago."

"£2bn in furlough fraud, how did that happen?"

Andy Burnham, the Greater Manchester mayor who was locked in a stand-off with Downing Street over financial support for the region, shared a tweet from the city's night time economy adviser accusing Boris Johnson of "playing politics" over furlough.

Labour's shadow chancellor Anneliese Dodds added that “questions remain” over the Government’s financial support package. She told MPs: “How many jobs could have been saved if this Government had recognised reality and let businesses plan for the future?

“Will the Chancellor apologise to those who have already been made redundant because of this last minute approach?"

She accused the Chancellor of being “always a step behind”.

Many businesses welcomed the extended support. But Paul Johnson, the director of the Institute for Fiscal Studies (IfS), was sharply critical. "Basically return to March schemes (dreamt up on the hoof in 24 hrs) as if nothing learnt since," he tweeted.

"Wasteful & badly targeted for self-employed. No effort at targeting sectors/viable jobs for employees. Big contrast to position just days ago."

The Chancellor defended the Government’s actions in the face of the Covid crisis, and insisted the second lockdown in England was the “only viable solution left to protect our NHS”, despite continued scrutiny over the Government's data used to justify the shutdown, which began on Thursday.

Mr Sunak also outlined support for the self-employed, telling MPs: “For self-employed people, I can confirm the next income support grant, which covers the period November to January, will now increase to 80% of average profits up to £7,500.”

The Chancellor also bowed to pressure from the devolved administrations and said “upfront guaranteed funding” for them will increase by £2 billion.

He said: “I also want to reassure the people of Scotland, Wales and Northern Ireland. The furlough scheme was designed and delivered by the Government of the United Kingdom on behalf of all the people of the United Kingdom, wherever they live.

“That has been the case since March, it is the case now and will remain the case until next March.“I can announce today that the upfront guaranteed funding for devolved administrations is increasing from £14 billion to £16 billion.”

The Chancellor added he would “leave it to the people” to decide whether the Government’s actions were right.