UK extends furlough scheme until April as more of England enters Tier 3

LONDON, ENGLAND - NOVEMBER 25: Chancellor Rishi Sunak visits the Imperial Clinic Research Facility at Hammersmith Hospital on November 25, 2020 in London, England. Chancellor of the Exchequer Rishi Sunak addressed the Commons on Tuesday, laying out plans for spending on infrastructure, jobs and public sector support, but warned that the economic emergency caused by the covid-19 pandemic had "only just begun." He predicted the number of unemployed people in the UK would surge to 2.6 million by mid-2021, and that the government is expected to borrow £394bn this year, the he highest level "in our peacetime history." (Photo by Jack Hill - WPA Pool/Getty Images)
Chancellor Rishi Sunak visits the Imperial Clinic Research Facility at Hammersmith Hospital on November 25, 2020 in London, England. Photo: Jack Hill - WPA Pool/Getty Images

The government has extended its costly programme of job and business support yet again, a sign of growing concerns about the continued impact of COVID-19.

The Treasury announced on Thursday that its job support scheme would be extended until April, with the government committing to pay 80% of furloughed workers’ wages.

COVID business support loans have also been extended. Bounce Back loans, coronavirus business interruption loans (CBILs), and coronavirus large business interruption loans (CLBILs) will all be available until the end of March. The programmes had been due to end in January.

“We know the premium businesses place on certainty, so it is right that we enable them to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our Plan for Jobs,” Chancellor Rishi Sunak said in a statement.

Thursday’s announcement marks the third extension for the job support scheme in two months. Furlough was due to end in November but was brought back at the last minute. The chancellor then extended the job support scheme again to run until the end of March. State-backed business loan schemes have also been repeatedly extended.

WATCH: What is the Bounce Back Loan scheme?

The extensions reflect the worsening path of the COVID-19 pandemic in recent weeks. England was forced into a second month-long lockdown at the start of November. The lockdown failed to meaningfully curb the COVID-19 second wave and the government has been forced to impose more stringent restrictions in recent days. London and much of the south east entered Tier 3 restrictions on Wednesday and Health Secretary Matt Hancock on Thursday announced more parts of the country would follow.

The restrictions have said to calls from business groups for more support from the government, particularly for the hospitality sector. Pubs are restaurants are forced to close under Tier 3 measures.

“Chambers are clear that government financial support must be commensurate with the impact on businesses,” Hannah Essex, co-executive director of the British Chamber of Commerce (BCC) said in a statement on Thursday ahead of the Chancellor’s announcement.

Tier 3 restrictions announced since the end of lockdown on 2 December have meant over 50,000 pubs, cafes and restaurants have had to close across England, according to property consultancy group Altus. Over 6,000 hotels and guest houses are shut due to Tier 3 restrictions.

WATCH: What is the Job Support Scheme and how has it changed?

Business secretary Alok Sharma said in a statement: “While our loan schemes have provided a vital lifeline to millions of firms across the country, we know that business owners need additional certainty as we head into the New Year.

“Extending government-backed loan schemes will give companies right across the UK the finance they need to support, protect and create jobs as we build back better from the pandemic.”

Businesses have so far borrowed £68bn under state-backed loan schemes, the Treasury said. Almost 10m people have bene furloughed under the government’s job support scheme at a cost of £46bn.

The billions of pound in support kept businesses from going bankrupt, with insolvencies lower than they were last year, but has not been enough to prevent job losses. Data at the start of the week showed redundancies had hit a record high, with over 370,000 people losing their jobs in the three months to October.