The government's furlough scheme has been extended until the end of April 2021 with the government continuing to contribute 80 percent towards wages.
Chancellor Rishi Sunak made the announcement yesterday (Thursday). The move has been welcomed by business leaders.
The changes come ahead of the Budget, which the Chancellor has confirmed will take place on 3 March 2021.
So far, the Coronavirus Job Retention Scheme has protected 9.6 million jobs across the UK with more than one million businesses accessing loans to help them through the crisis.
“We know the premium businesses place on certainty, so it is right that we enable businesses to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our Plan for Jobs,” said the chancellor.
Business secretary, Alok Sharma added: "“While our loan schemes have provided a vital lifeline to millions of firms across the country, we know that business owners need additional certainty as we head into the New Year.
“Extending government-backed loan schemes will give companies right across the UK the finance they need to support, protect and create jobs as we build back better from the pandemic.”
Commenting on the extension of the furlough scheme until the end of April James Martin, director of policy at the British Chambers of Commerce, said: "The extension to the furlough scheme is a welcome move and will provide much needed certainly and support that many need to protect jobs and livelihoods.
"Over the coming months, the government should continue to listen to business and evolve it support measures with the on the ground impact of the pandemic.
"Further cashflow support will be needed for companies who are unable to operate for an extended period, or those who face reduced capacity or demand due to ongoing restrictions.”
On the extension of government-backed loan schemes - the Coronavirus Business Interruption Loan Scheme, Coronavirus Large Business Interruption Loan Scheme and Bounce Back Loan Scheme – until the end of April, BCC's head of economics, Suren Thiru, said: “Cashflow remains an urgent concern for many businesses, so the extension to the government-backed loan schemes is a common-sense step.
“However, it is concerning that many firms who bank with non-accredited lenders remain effectively locked out of these vital financial lifelines. Government, regulators and banks must work together to ensure that all eligible firms can access this support to help them weather this challenging period.
“Government must also be ready to further expand the existing grant schemes to ensure that as many businesses as possible get access to the support they need.”
Rain Newton-Smith, chief economist at the CBI, said: “In the middle of a tough winter, this will bring some much-needed certainty and respite for businesses.
“Stable employer contributions and an extension to the Job Retention Scheme until the end of April will mean the scheme continues to protect people’s livelihoods.
“And with cashflow difficulties still at the forefront of the minds of many business owners, continued access to Government-backed loans through to Spring will bring great comfort.
“In early 2021, businesses will likely need clarity about the level of support beyond the Spring to build a bridge to economic recovery.
“Working with firms to evolve the furlough scheme, support cashflow and avoid cliff-edges in other schemes like tax deferrals, grants and business rates holidays, will be essential early in the new year.”
Meanwhile, the Federation of Small Businesses said the furlough extension was "a step forward" but small firms would need a pro-business budget.
National chairman Mike Cherry said: “Small businesses are facing one of the bleakest winters on record, so extending full, flexible furlough to the end of April is a positive move as they try to navigate a tougher than normal January and February.
"This is in line with when people are due their fourth self-employed income support grant.
“However, while helpful, furlough does not reduce the cost per hour of employing someone still working and does not protect against the huge range of other fixed costs threatening to push them under before restrictions are lifted.
“It is reassuring to see the extension of the emergency loan application window, giving the Government the breathing room it needs to work with the banks and FSB on creating a successor scheme that is ambitious in scope and accessible to small businesses – not just larger firms.
“The Government must also review a number of other urgent priorities before its March 2021 budget. The newly self-employed, owner directors and suppliers are facing the bleakest of winters, but FSB’s proposals to create a new Director Income Support Scheme (DISS) could allay some of their immediate anxieties.
“To promote job retention and creation, the Government should look at firms who are able to recruit by lowering national insurance costs or by expanding the Kickstart scheme to more vulnerable groups.
“It’s been the opposite of a pro-business year and there’s never been a more important time for the Chancellor to deliver a pro-business, pro-growth budget in 2021 – one which doesn’t create new costs for businesses just as they’re trying to get back on their feet, but instead charts a course to economic recovery.”