Businesses told to contribute to furlough scheme from August as final self-employment grant announced
A final self-employment coronavirus grant is to be made available and businesses must start paying towards the worker furlough scheme from August, the Government has announced.
Freelancers will be able to claim up to £6,570 from that date, giving those workers access to a total coronavirus grant of up to £14,070 each.
Businesses will also have to start paying National Insurance and tax contributions for staff in August, ramping up to 10 per cent of furloughed wages in September and 20 per cent in October.
Chancellor Rishi Sunak had previously announced the plan to get businesses to contribute to the Coronavirus Job Retention Scheme (CJRS), but he laid out further details today.
He also revealed that workers can return part-time without losing any furlough payments from July - a month earlier than previously planned, following lobbying from businesses.
But businesses must start bearing the costs and from August all companies using the furlough scheme must start paying National Insurance and employer pension contributions.
In September and October contributions will rise to 10 per cent and 20 per cent respectively, the Chancellor added, but workers still furloughed will keep getting 80 per cent of their wages up to £2,500 a month.
Mr Sunak told the Downing Street daily coronavirus press conference: “As we reopen the economy, there is broad consensus across the political and economic spectrum, the furlough scheme cannot continue indefinitely."
He acknowledged that not everyone has been supported in the way that they would have wanted during the pandemic.
He said: “Our economic response to coronavirus was designed to keep people in work, protect people’s incomes and support businesses, all to give us the best chance of recovering quickly as the economy reopens.
“These measures have been on a scale unmatched by any government in recent history.
“I do want to acknowledge that we haven’t been able to support everyone in the exact way they would want.
“I understand some people have felt frustrated but you were not and have not been forgotten.”
But he said that a new collective effort to reopen the country has begun.
He said: “Now, our thoughts, our energies, our resources must turn to looking forward to planning for the recovery and we will need the dynamism of our whole economy as we fight our way back to prosperity.
“Not everything will look the same as before. It won’t be the case that we can simply put the key in the lock, open the door and step into the world as it was in January.
“We will develop new measures to grow the economy, to back business, to boost skills and to help people thrive in the new post-Covid world.
“Today, a new national collective effort begins to reopen our country and kick-start our economy.”
The Government will cover 70 per cent of wages up to £2,190 in September, with employers to pay National Insurance and pension contributions and 10 per cent of wages, representing 14 per cent of the gross employment costs.
The following month, the Treasury will pick up 60 per cent of wages up to a cap of £1,875, with employers paying tax contributions and 20 per cent of wages, representing 23 per cent of the gross employment costs, the Government said.
It added that only 40 per cent of businesses had claimed the pension contributions since the scheme was launched.
Officials added that companies can be flexible with their definition of "part-time" as long as a full-time employee has not returned to normal hours.
The Treasury said: "Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them - and will be responsible for paying their wages while in work."
Since it was launched, the CJRS has been used by one million businesses to support 8.5m jobs, at a cost of £15bn so far.
The scheme is expected to cost a total of around £80bn, or £10bn a month, although the Office for Budget Responsibility is set to publish detailed costs next week.
Business groups had asked the Government to ensure that those industries suffering hardest were most protected.
But the Treasury said it was not always clear which sector a business was in, insisting it would not rule out future support if required.
Mr Sunak said: "Now, as we begin to reopen our country and kick-start our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world."
The Chancellor had faced calls, including from a cross-party group of 113 MPs, to extend the scheme for self-employed workers, which has so far seen 2.3m claims worth £6.8bn.
The grant will be worth 70 per cent of their average monthly trading profits, paid out in a single instalment covering three months' worth of profits, and capped at £6,570 in total.
To combat fraud, employees will be able to report any concerns to HM Revenue and Customs.
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