Furlough extension buys workers more timepublished at 14:03 British Summer Time 12 May 2020
Faisal Islam
BBC Economics Editor
Over a quarter of all UK jobs - 27%, 7.5 million in total - are now paid for by the taxpayer, potentially for eight months. All of that subsidy will come from the taxpayer up until the end of July, in a further month’s extension to the existing arrangements.
After that, the level of subsidy from the government will be lowered, with employers expected to pay a contribution.
The exact amount has not been revealed, and will not be until later this month.
But there will also be more flexibility to support part-time work, helping bring back furloughed workforces in a phased way. Currently the scheme requires that employees do not work at all.
So by August the scheme could start to look quite similar to longer-standing wage subsidy schemes seen in continental Europe.
The cost of extending the same scheme would have been another £39bn. The cost to date is already over £10bn.
This extension will be tens of billions more, but it is difficult to put a precise number on this given the lack of detail on the “employer contribution”.
It's expensive, yes. But it would be more costly to let unemployment start to skyrocket, as without an extension many businesses would have begun 45-day redundancy consultations this week.
The question now is how many businesses still see this as a bridge to some sort of normality where furloughed staff can be phased back into their old jobs.
Unfortunately some in industries which will not return to normal have already started to fire staff.
This announcement buys most workers more time.