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12 May 2020updated 06 Oct 2020 9:45am

Evening summary: Furlough time-bomb defused

By Samuel Horti

Chancellor Rishi Sunak made headlines today by announcing that the government’s furlough scheme will be extended by four months – longer than expected. Reports had suggested the scheme would be extended by three months, until the end of September, and that after June the government would cut payments to 60 per cent of salary. But Sunak said furloughed workers can expect to be paid 80 per cent of their salary until the scheme closes at the end of October, with contributions split between the government and employers from August, at which point people can also return to work part-time.

In keeping payments at 80 per cent Sunak has, as New Statesman political correspondent Ailbhe Rea wrote today, “averted a potential ticking-time bomb under the economy” that would’ve left people struggling to make ends meet. But his announcement left plenty of urgent questions unanswered. One, writes Resolution Foundation director Torsten Bell, is: what happens when the scheme runs out? But more immediately, businesses are awaiting crucial detail on how the 80 per cent payment will be split from August.

The worry is that if businesses are asked to pay too much, they will simply make staff redundant instead. Will the government introduce a flat rate for all businesses that gradually drops over time? Could it tailor the split based on businesses’ profitability? We’ll find out later this month.

One interesting line from this evening’s Downing Street briefing: Sarah Albon, chief executive of the Health and Safety Executive, said that businesses will need to consider the vulnerability of their staff when they conduct their coronavirus risk assessments. Those that are more vulnerable to Covid-19 will need to be “facilitated to be particularly scrupulous” in following safety rules, she said (as opposed to…?). She did not expand on the point, but given that we know certain groups are more vulnerable than others – including ethnic minorities and older people – her words open the door for a debate around who should be returning to work, when, and in what roles.

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