Demands from businesses to extend the furlough scheme were rejected by Rishi Sunak last night – despite the expected delay to ending lockdown.
The hugely expensive wage support fund is due to start being wound down at the end of this month.
As part of the Budget earlier this year, the Chancellor announced he would stop covering 80 per cent of the salaries of those not at work.
From July 1, the Government’s share will fall to 70 per cent with employers contributing 10 per cent, as part of a staged withdrawal of the scheme due to finish completely at the end of September.
Business groups including the British Chamber of Commerce yesterday urged the Chancellor to delay the wind down if lockdown is extended, while hospitality chiefs claimed as many as 200,000 jobs were at risk.
But sources close to Mr Sunak insisted the timetable for gradually withdrawing furlough would remain the same.
They said that by extending support to the end of September the Treasury had already ‘gone long’ in case there was any delay to reopening. Mr Sunak is also resisting calls to extend the business rates holiday that is also due to start being withdrawn at the end of the month.
Retail, hospitality and leisure premises have been helped with a 100 per cent relief since last March when the lockdowns first began. The Government is due to reduce the relief to 66 per cent from July 1 and it will remain in place until the end of March next year.
Trade body UKHospitality has called for Mr Sunak to keep the full relief in place for a further three months until the start of October.
Chief executive Kate Nicholls said yesterday: ‘We recognise that the Chancellor has provided long-term support for the sector which extends into the recovery period, but there is no doubt that any extension to the restrictions will be challenging for sectors yet to open and those still trading at a loss to navigate.’
She added: ‘Among other measures, the Government must postpone business rates payments until at least October and extend the rent moratorium while a long-term solution is found.
‘Businesses need a swift, publicly-stated commitment that such support will be in place in the event of any delays, giving them much-needed reassurance after more than 15 months of closure and severely disrupted trading.
‘Hospitality is desperate to get back to what it does best and can play a key role in the economic recovery of the UK – but only if it is given the proper support.’
Most recent figures showed there were 3.4million jobs on furlough at the end of April, which was 900,000 lower than the month before. Since the start of the scheme last March, a total of 11.5million jobs have been supported by furlough at some point at a cost of £64billion.BUSINESS NEWS • ECONOMIC NEWS • MAKE MONEY • News