Home U.K Martin Lewis redundancy warning: July lay-offs loom as furlough cost to soar...

Martin Lewis redundancy warning: July lay-offs loom as furlough cost to soar for employers

0


Rishi Sunak confirmed the furlough scheme will be extended until the end of September, and employees will continue to receive 80 percent of their salary for hours not worked. The Chancellor told MPs: “Nothing will change until July, when we will ask for a small contribution of just 10 percent and 20 percent in August and September.” But Martin Lewis from Money Saving Expert has warned that this contribution will spark worry in employers as they look to which employees are “needed”.

Speaking to LBC, Mr Lewis said: “We know from previous iterations and when we thought we were coming out of this the first time, the more you make employers pay towards furlough the less people they’ll keep on furlough they’re not sure whether they’re going to need afterwards.

“Right now employers contribute National Insurance and they contribute compulsory pension contributions but the full wages are paid by the government for those on furlough.

“From July employers will then have to pay 10 percent towards salary from August, 20 percent towards.

“At that point if you are a business, at the moment you’ve got that wiggle room and keep people on but once you’re paying 10 or 20 percent of the salary it’s a crystalisation point to the mind that says, ‘from now on I am only keeping people on who I will definitely need’.

READ MORE: Nicola Sturgeon no longer relevant to Scottish independence bid

“We still start to see some unemployment on the back of that increase in furlough.”

It comes as the Government is to back loans of up to £10 million for companies that need support until the end of the year as its Covid-19 lending schemes run out.

Chancellor Rishi Sunak told MPs he plans a new Recovery Loan Scheme to tide businesses over.

From April 6 it will replace the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS) and its larger sibling CLBILS.

The new scheme has the same Government guarantee as CBILS and CLBILS, but is less generous than the 100 percent guarantee for BBLS.

Bounce back loans were first unveiled in late April last year and became available to businesses just days later in early May.

With the higher guarantee, and less rigorous controls from lenders, the bounce back loans have proven by far the most popular of the three schemes, both in terms of the number of loans granted and the total amount lent.

By February 21, more than 1.5 million businesses had been lent #45.6 billion in total, with another half a million having applied.



LEAVE A REPLY

Please enter your comment!
Please enter your name here