Rishi Sunak will ban companies from furloughing any more staff as the government looks at winding down the scheme, according a new report.
The Chancellor is expected to announce the ban will come into the place from the end of July, The Financial Times reports.
According to the most recent figures, 8 million people had been furloughed since the start of the coronavirus crisis.
It’s believed Mr Sunak will also give details of the job retention scheme where businesses will have to pay at least a fifth of the wages of furloughed employees from August, despite the Government extending the scheme to October.
The latest changes to the scheme are expected to include firms covering 20% to 30% of workers’ wages as the furlough scheme is wound down.
Under new terms being drafted up, employers will be allowed to take furloughed workers back part-time, and all firms using the coronavirus job retention scheme will be required to make the payments, even if they remain closed, The Times reported earlier this week.
A Treasury source said: “We’ve got two full months of support left and afterwards the government will help to pay people’s wages, but it’s fair to everyone that businesses contribute as they get back to work.”
Sunak has already said the furlough scheme will be in place until at least October but asking firms to foot a higher bill could in effect force many employers consider job cuts.
The Treasury will reportedly direct employers to cover between 20% and 30% of an employee’s wage, plus national insurance, at 5% on top.
The furlough scheme pays 80% of a worker’s salary up to £2,500 a month, and is supporting about a third of the private-sector workforce.
The Office for Budget Responsibility has already warned the scheme could cost up to £80billion.
All high street businesses were ordered to close on March 23 after the UK went into lockdown following a surge in coronavirus cases.
Employees across the UK were told to work from home where possible, leading employers who were facing significant losses to apply for help via the Government’s furlough scheme.
As part of efforts to wind it down, those who are unable to work from home are now being advised to return to work – though without using public transport where possible.
This will be followed by schools, car showrooms and open markets reopening on June 1 and non-essential businesses, like retail outlets, will open their doors from June 15 as lockdown measures are further eased.
Speaking in the House of Commons earlier in May, Rishi Sunak said: “Until the end of July there will be no changes whatsoever. Then from August to October, the scheme will continue for all sectors and regions of the UK but with greater flexibility to support the transition back to work.
“Employers currently using the scheme will be able to bring furloughed employees back part-time. And we will ask employers to start sharing with the government the cost of paying people’s salaries.
“Full details will follow by the end of May, but I want to assure people today of one thing that won’t change: workers will through the combined efforts of Government and employers continue to receive the same level of overall support as they do now at 80% of their current salary up to £2,500 a month.”