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Business

Covid-19 furlough scheme continues to wind down

The government’s novel coronavirus (Covid-19) furlough scheme has moved to its next stage of winding down, with companies from this month required to make a larger contribution to staff’s wages.

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The furlough scheme has cost the UK government billions of pounds

Introduced earlier this year to help businesses through the Covid-19 crisis, the scheme has seen the government pay 80% of the wages for staff who had been placed on furlough, up to a maximum of £2,500.

The initiative allowed companies to keep staff in jobs, but without having to bear the full financial implications of this while being closed or operating at a reduced capacity during the pandemic.

However, as announced by Chancellor Rishi Sunak, the initiative began to wind down in August, with the scheme set to end on October 31st.

From September, companies with staff on furlough will be required to pay 10% of these employee’s wages, with the government to pay 70% of these wages until the end of the month, up to £2,187.50

This new requirement is in addition to the national insurance and pension costs that employers have had to pay since the start of August.

From October, businesses will have to pay 20% of furloughed staff’s wages, as well as their national insurance and pension, with the government to pay 60% of wage costs, up to £1,875 per member of staff.

Barring any further announcements by the government, its furlough scheme will conclude in November, with companies then faced with the decision of bringing staff back into work or letting them go from the business.

Since the scheme was announced back in March, more than 9.5m workers in the UK have benefitted from the scheme, with one in 12 still having their wages paid by the state.

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