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Furlough scheme will NOT be extended – Rishi Sunak refuses to budge despite lockdown delay

Furlough: Andy Haldane suggests pay rises may be the answer

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UK Chancellor of the Exchequer Rishi Sunak last night rejected demands from businesses to extend the furlough scheme. A Treasury source said that although the UK’s furlough scheme was “one of the most generous in the world”, there would be no change to the gradual winding down timetable. This was despite Mr Johnson’s expected delay in ending England’s lockdown.

The Government’s wage support fund, which is enabled by massive borrowing, is due to start being wound down at the end of June.

Mr Sunak announced he would stop covering 80 percent of the salaries of those not at work from July 1.

However, now UK business groups have urged the Chancellor to delay this impending wind down if the Prime Minister extends the lockdown.

After July 1 the furlough scheme will only cover 70 percent of wages, with employers contributing 10 percent.

The plan is to reduce the furlough payments gradually until the Government stops them completely at the end of September 2021.

UK hospitality businesses have claimed that as many as 200,000 jobs are now at risk if Mr Johnson instigates an extension to England’s lockdown.

To make matters worse for struggling businesses it has been reported that Mr Sunak is also resisting calls to extend the business rates holiday.

The business rate suspension is expected to start being withdrawn at the end of the month.

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Since the first lockdown began last year retail, hospitality and leisure premises have been supported with a 100 percent wage relief package.

This has been made available by Government borrowing.

The Government is due to reduce the relief to the hospitality, retail and leisure sector to 66 percent of former wages from July 1.

UK Hospitality, a British trade body, urged Mr Sunak to keep the full relief in place for an additional period, until the start of October.

Speaking to the Daily Mail Chief executive Kate Nicholls said: “We recognise that the Chancellor has provided long-term support for the sector which extends into the recovery period.

“However, there is no doubt that any extension to the restrictions will be challenging for sectors yet to open and those still trading at a loss to navigate.”

She added: “Among other measures, the Government must postpone business rates payments until at least October.

“They must also extend the rent moratorium while a long-term solution is found.

“Businesses need a swift, publicly-stated commitment that such support will be in place in the event of any delays, giving them much-needed reassurance after more than 15 months of closure and severely disrupted trading.

“Hospitality is desperate to get back to what it does best and can play a key role in the economic recovery of the UK.

“But only if it is given the proper support.”

The Treasury has been asked to comment but has yet to reply.

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