The Coronavirus Job Retention Scheme (CJRS) has been in place since March 2020, and has been extended several times. The CJRS is more commonly known as ‘furlough’ and has been responsible for keeping over 11 million people’s jobs safe over the past 18 months.
The government initially contributed 80% of workers’ wages, reducing to 70% in July, and further reducing to 60% in August and September as more restrictions have been loosened and more people have been able to work.
However, with furlough set to end completely on 30 September, many are asking what will happen to the 1.6 million people still relying on it, and how SMEs will continue to keep their businesses afloat without letting staff go.
What will happen when furlough ends?
The government has reported that almost three million people have moved off the furlough scheme since March 2021, as businesses have reopened.
However, with ONS figures estimating around 1.6 million individuals still benefiting from the scheme, it’s concerning that the furlough scheme is now coming to an end without further support being put in its place. A £20-a-week uplift to Universal Credit is also being withdrawn, making a noticeable dent in the incomes of some of the UK’s poorest households.
According to a leading thinktank, there will be a notable hit to jobs as a result of the scheme ending. The National Institute of Economic and Social Research (Niesr) has predicted that the rate of unemployment in the UK will see a jump from 4.8% currently to 5.4% once the scheme is phased out.
While this is smaller than previous predictions, this does still suggest that 150,000 individuals will be out of work following the scheme’s end in September – spurring calls to the government to rethink the sudden end of support and offer a smoother transition.
Debt charities have also warned that more than half a million renters that are thought to be in arrears will no longer be protected from eviction.
Businesses have also been saddled with enormous amounts of debt, accrued during periods when they were legally required to be closed. Those who are still seeing the knock-on effects of this, and increased costs due to Coronavirus such as implementing new safety measures, will certainly struggle when it comes to the end of the furlough scheme.
Despite a post-lockdown boom in demand, the UK is also seeing shortages in labour and materials due to both Coronavirus and Brexit – notably hindering its ability to meet this demand.
Hande Küçük, a deputy director of the thinktank, said: “Supply-side factors and effects of reopening amid the recovery in consumption are likely to keep inflation well above the Bank of England’s 2% target for the most part of next year.”
What do SMEs need to do about furlough?
Final claims for furlough must be submitted to HMRC by 14 October, with any amendments being made by 28 October.
While the next steps for government support remain unclear, it’s important to keep ahead of any looming deadlines or changes to government schemes – they have been updated a number of times already, and calls for further support could mean further changes for you and your staff.
Here for you
If you would like to chat about what support is out there and practical steps you can take to protect your business, please do get in touch. You can contact the team here, or call our Southend office on 01702 466 886.
