UK Covid-19 furlough scheme starts to be scaled back

The contribution of employers to the cost of keeping staff on furlough will be increased from July 1, with the UK Government starting to wind down the scheme.

Changes to the scheme are being introduced from Thursday, with employers having to pick up 10% of their furloughed workers’ salaries following the easing of coronavirus restrictions in recent months.

The furlough contribution from employers is due to rise after that date to 20% in August and September, with the scheme closing before October.

On Wednesday at PMQs, Prime Minister Boris Johnson ruled out an extension of full furlough and business support beyond September amid a surge in the Delta variant.

Economists have indicated that they expect to see a spike in redundancies over the summer as furlough is phased out.

Latest figures published by HMRC on Thursday indicated that 173,100 were on furlough in Scotland as of May 31 – down from 275,700 on April 30.

Of total number recorded for May, 86,300 were women, whilst 86,900 were men.

Glasgow City, City of Edinburgh, South Ayrshire and Highland were the areas with the highest uptake of the scheme in Scotland.

Speaking on the BBC’s Good Morning Scotland programme, Scottish finance secretary Kate Forbes called for a further extension to the furlough scheme.

Asked about the timeline for an extension, she said: “Well, that’s not precise at the moment because clearly we have set out our key dates of July 19 and August 9.

“Now, those will be kept under review based on the data, but ultimately, if businesses are having to pay 10% as of today, we know quite clearly that as of today, some of those sectors and businesses are still closed.

“So, I think that the furlough scheme should be tailored to the exit of lockdown and we hope very much that we will be back to normality as soon as possible, but we’re not there yet.”