Furlough has ended after being available to UK businesses since the 19th of March 2020. Well over a year later and after many changes, the government backed scheme officially stopped on the 30th of September. A month later, we are looking at what the end of furlough means for businesses and employees across the country.
What is furlough?
Furlough was a financial aid that the UK government provided throughout the Corona-virus pandemic. The government paid a percentage of the wages of those who couldn’t work or for those employers who could not afford to pay them.
The initial payment contributions were 80% which then reduced to 60% and then 20% as the country began to come out of lock down and businesses could operate again. The furlough scheme is also known as the Corona-virus Job Retention Scheme.
How much did furlough cost?
Furlough is thought to have cost around £66bn which is one fifth of the spend on the response to Covid-19. According to the House of Commons, the value of highest claims by sector was £869 million for accommodation and food services. This was closely followed by wholesale and retail and repair of motor vehicles at £744 million. You can view the breakdown of cost per sector here: CBP-9152.pdf (parliament.uk)
What does it mean for businesses and employees now furlough has ended?
Now furlough has ended, businesses can no long rely on their employers wages to be topped up by the government. Almost one million workers were still thought to be part of the furlough scheme when it stopped, leading to concerns about redundancies or employees loosing hours.
Employment rates however are at one in twenty which is an improvement on the estimated one in ten. Redundancies have also been relatively low with August 2021 being the lowest month in seven years.
It is important for employers to make plans for their staff who are returning to the workplace, this includes flexible and reasonable adjustments, keeping the workplace safe and thinking about how the workplace might reopen.
With lock down restrictions in the UK being much more relaxed than last year, the general consensus is that over the following months, all businesses will be able to gradually begin operating again if they haven’t done so already.
There could be a turbulent few months ahead as the country adjusts to the end of the furlough scheme however nothing is set in stone. Some predictions include a rise in unemployment, increase in debt or an uplift in redundancies. However, more people could return to work and businesses could begin to make profits once again.
The important thing to consider now furlough has ended is how you will manage your business and finances moving forward. It is a really good idea to have a plan in place so you know where you see your business in the coming months and into the new year.
At Cooper Accounting we are able to assist with any aspect of your business accounts and can help you make sense of your finances. Whether it’s assistance with payroll or limited company accounts or, you simply want advice, please don’t hesitate to get in touch.