Chancellor Rishi Sunak has extended the furlough scheme until the end of April 2021.
The UK Government will continue to cover 80% of wages for those not working through to mid-Spring, in a move described as giving businesses and employees certainty into the New Year.
Sunak said: “We know the premium businesses place on certainty, so it is right that we enable businesses to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our Plan for Jobs.”
He also confirmed the extension of the government-guaranteed Covid-19 business loan schemes until the end of March, which had been the latest furlough end date.
These changes come ahead of the Budget, which the Chancellor has confirmed will take place on 3 March.
So far, furlough – or the Coronavirus Job Retention Scheme (CJRS) – has protected 9.6 million jobs across the UK, with more than one million businesses accessing loans to help them through the crisis.
Business Secretary Alok Sharma said: “While our loan schemes have provided a vital lifeline to millions of firms across the country, we know that business owners need additional certainty as we head into the New Year.
“Extending government-backed loan schemes will give companies right across the UK the finance they need to support, protect and create jobs as we build back better from the pandemic.”
The Chancellor said he would review the employer contribution element of the CJRS in January, but decided to bring this forward to allow businesses to plan ahead for the remainder of the winter and the New Year.
Employers will only be required to pay wages, National Insurance contributions and pensions. Eligibility remains the same.
Malcolm Cannon, national director for the Institute of Directors Scotland, said: “This further extension to the furlough scheme will bring a little pre-Christmas good cheer, but it is really another indicator that businesses are unlikely to return to a pre-2020 ‘normal’ any time soon.
“The continued support will serve as a lifeline for many, but long term solutions must be considered to ensure that the new financial year doesn’t create a chasm for ailing companies to fall into.”