Britain's chancellor of the exchequer Rishi Sunak. Picture: AFP/DANNY LAWSON
Britain's chancellor of the exchequer Rishi Sunak. Picture: AFP/DANNY LAWSON

London — Britain extended its job retention scheme — the costly centrepiece of its attempts to mitigate the coronavirus hit to the economy — by four more months on Tuesday but told employers they would have to help meet the cost from August.

Finance minister Rishi Sunak said there would be no changes to the scheme, which pays 80% of the wages — up to £2,500 a month — of 7.5-million workers temporarily laid off, until the end of July.

From August, the process will continue with greater flexibility to support the transition back to work, allowing employers currently using the scheme to bring furloughed employees back part-time.

“We will ask employers to start sharing the cost of paying people’s salaries with the government,” Sunak told parliament, adding that he expects the scheme to close by the end of October. It had previously been due to run until the end of June.

“Our coronavirus job retention scheme has protected millions of jobs and businesses across the UK during the outbreak — and I’ve been clear that I want to avoid a cliff edge and get people back to work in a measured way,” he said.

The scheme is expected to reduce a rise in unemployment in Britain. But at about £10bn a month, its cost is near the amount Britain spends on public health services.

Sunak told lawmakers the scheme is expensive and that it cannot continue indefinitely.

The UK is racking up new debt at a furious pace: it is due to issue £180bn in government debt between May and July, more than previously planned for the entire financial year.

The country’s debt mountain exceeds £2-trillion and its public-sector net borrowing could reach 14% of GDP this year, the biggest single-year deficit since World War 2

An employers’ group said the inclusion of part-time working in the furlough scheme would help companies get back up to speed but that it needs more information on how companies will be asked to make contributions.

“Many firms that would normally be on a strong footing are still in dire straits,” said Edwin Morgan, director of policy at the Institute of Directors.

Sunak said he will provide further details by the end of May.

Reuters