Budget 2021: Chancellor extends furlough to September and offers management training for SMEs

CIPD says extending the job retention scheme will save thousands of viable roles, as Sunak unveils Covid recovery policies during this year’s announcement 

Chancellor Rishi Sunak has outlined a number of economic plans, including another four-month extension of the furlough scheme to the end of September, in his budget statement this afternoon.

The job retention scheme, which had been billed to finish at the end of April, will be extended to the end of September, with employers' contributions set to increase gradually in the same manner as when the chancellor initially attempted to phase it out in October last year.

For now the government will still cover 80 per cent of workers’ salaries for the hours they are not working, up to a maximum of £2,500 a month, with employers only asked to pay pension and national insurance contributions. Employers are still expected to pay workers normally for the hours worked.

However, from July businesses will be expected to contribute 10 per cent of employees’ wages for the hours not worked, increasing to 20 per cent in August and September.

Reacting to the news, Ben Willmott, head of public policy at the CIPD, said the extension would “help buy critical time for the vaccination programme to be rolled out across more of the working-age population and for economic recovery to take root”. 

"This action will save thousands of viable jobs that otherwise would have been lost if the scheme had finished at the end of April, and could help ensure that unemployment undershoots the official forecasts,” he said.

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TUC general secretary Frances O’Grady agreed extending furlough was vital to protect jobs and businesses, but said Sunak should have announced it earlier and committed to keeping it in place for as long as is needed. 

She said the job retention scheme should be available until at least the end of the year because, without specific support, the hardest-hit sectors – such as hospitality, retail, the creative industries, travel and aviation – will struggle to reopen fully.

“To make sure everyone can return to a decent job, ministers should promote training for those on furlough,” she said. “The chancellor should also make sure all furloughed workers get at least the national minimum wage.

“Protecting existing jobs is only half the battle. The chancellor must now deliver a major programme of job creation in his budget.”

However, Helen Jamieson, founder of Jaluch HR, warned that while well intentioned, the furlough scheme risked “holding everyone down”, and said the money put into the scheme would have been better spent reskilling workers. “In spring last year it would’ve been far better to invest government money in training, retraining, jobs creation and innovation than to put people into a holding pen that slowly eats away at their confidence,” she said.

“In particular, furloughing workers where their industry is changing dramatically for the long term, meaning they will not be returning to jobs they left, is not helpful. It is damaging self-esteem, damaging social interactions and damaging career prospects.” 

Sunak also announced yesterday a ‘help to grow’ scheme offering free MBA-style management training for up to 130,000 leaders of SMEs, with £520m to be put into online courses from top business schools and a 50 per cent discount for new software.

He said: “Our brilliant SMEs are the backbone of our economy, creating jobs and generating prosperity – so it’s vital they can access the tools they need to succeed. Help to grow will ensure they are embracing the latest technology and management training, fuelling our plan for jobs by boosting productivity in all corners of the UK.”

Also among the raft of measures announced today were a £20 per week uplift to universal credit for an extra six months; greater support for self-employed workers; £400m for the arts sector; and a £5bn grant to help businesses like shops, restaurants, venues and gyms to reopen following the Covid pandemic.

Sunak also announced he was doubling the incentive payments for businesses taking on new apprentices of any age to £3,000.