Government’s furlough scheme opens for applications

20 Apr 2020 By Maggie Baska

Employers can expect to receive grant money in time for April payroll, with experts warning any delays could ‘threaten jobs and businesses’

The government’s job retention scheme opened for applications this morning, with 67,000 claims reportedly being made in the first 30 minutes of the online portal going live.

Millions of workers are expected to be furloughed via the scheme – first announced by chancellor Rishi Sunak a month ago – through which employers can apply for cash grants from HMRC to cover 80 per cent of workers’ wages, up to £2,500 a month, if they are not required to work because of the coronavirus crisis.

The Treasury says the online application portal can process 450,000 applications an hour, and employers should receive the money within six working days of making an application – meaning they should receive funding in time for April payroll.

Adam Marshall, director general of the British Chambers of Commerce, said the opening of the scheme was an “important milestone” for businesses, which can now begin to access the funds needed to pay staff. “With April's payday approaching, it is essential that the application process is smooth and that payments are made as soon as possible,” Marshall said.

“Any delay would exacerbate the cash crisis many companies are facing and could threaten jobs and businesses.”

As the scheme opened today, the Resolution Foundation said it expected as many as 8.3 million people to be furloughed over the next three months because of the crisis, with the scheme being used most prevalent in the hospitality and retail sectors, where almost half (46 per cent) of the estimated 3.1 million workers are expected to be furloughed. This compared to just 4 per cent of workers in finance and insurance.

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It estimated a further 3.4 million people could also be unemployed as a result of the pandemic. 

Daniel Tomlinson, economist at the Resolution Foundation, said the job retention scheme was “what stands between Britain experiencing high unemployment over the coming months and catastrophic depression-era levels of long-term joblessness”.

He added the government’s priority should be to process claims as quickly as possible so firms relying on it get the financial support they need. “Given the scheme’s central role in both providing a safety net and restarting economic activity, the government should provide regular updates on take-up and payments, and extend it to allow shorter-hours working,” Tomlinson said.

Experts have previously called on businesses to see furloughing staff as a last resort to avoid redundancies, and the CIPD said the scheme’s current “all or nothing" approach needed to change to allow furloughed staff to carry out work for their existing employer where possible. 

Peter Cheese, chief executive of the CIPD, said the government had shown it was prepared to adapt and improve its rescue packages for businesses and workers, and needed to do so again by making the job retention scheme more flexible as lockdown has been extended. 

“As it stands, furloughed staff are not able to do any work for their existing employer, meaning organisations that could provide some work for staff on reduced hours are not able to,” Cheese said. “This change would enable employers to bring back workers gradually, which is likely to be necessary if lockdown measures are phased out over time.”

By making the scheme more flexible, the CIPD argued businesses could flex their workforce more efficiently, taking pressure off non-furloughed staff.

Through the job retention scheme, firms can backdate claims for wages of staff who were furloughed from 1 March 2020. The scheme was set to run for three months to the end of May, but Sunak announced last week that this will be extended by an extra month to the end of June after the government confirmed that lockdown restrictions in the UK would continue for at least three more weeks.

The HMRC website said there was a possibility that the job retention scheme could be extended again if the government deems it necessary.

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