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Chancellor outlines details of plans to pare back furlough scheme

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The chancellor has explained how much companies will have to contribute if they continue using the government’s job retention scheme after July

Rishi Sunak unveiled detailed plans for tapering off the furlough scheme, which will run until the end of October, during a press conference on Friday (29 May).

From August, businesses will have to cover the National Insurance and employer pension contributions of furloughed workers, he said. This amounts to 5 per cent of the average furlough claim.

From September, the government will only pay 70 per cent of the wages of employees who are still on furlough, with firms being told to cough up a further 10 per cent to maintain the overall level of furlough pay at 80 per cent.

As of October, the taxpayer contribution to the wages of workers who are still furloughed will drop to 60 per cent, with employers having to pay 20 per cent.

The job retention scheme will be closed to new applications from 30 June, while furloughed staff can come back part-time from July – with employers just paying staff for the time they work.

The chancellor also unveiled an extension to the income support scheme for self-employed workers.

Self-employed workers will be able to claim a second, and final, grant in August for 70 per cent of their monthly trading profits – paid out in one instalment but covering three months’ profits – which is capped at a total of £6,570.

Announcing the changes, Sunak said: ‘As we reopen the economy, there is a broad consensus across the political and economic spectrum the furlough scheme cannot continue indefinitely.

‘Now, our thoughts, our resources, must turn to planning for the recovery and we will need the dynamism of our whole economy as we fight our way back to prosperity. Today a new national effort begins to reopen our country and kickstart our economy.’

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