Budget 2021: Furlough likely to continue until 21 June

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Business secretary Kwasi Kwarteng has implied that furlough will continue as long as elements of lockdown remain in place.

With speculation mounting over tomorrow’s budget, Kwarteng told the BBC that business support would continue so as not to risk “crushing” any economic recovery.

The furlough support, formally the Coronavirus Job Retention Scheme, is currently set to end on 30 April, but the prime minister’s roadmap for easing Covid restrictions says the final legal limits on social contact and business activity will end no earlier than 21 June.

The scheme allows employees to claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 a month.

Asked by the BBC today (Tuesday, 2 March) whether the job support scheme would continue, Kwarteng said the chancellor had “already indicated that we will be extending furlough”.

He added: “I think it’s a fairly good assumption that, while lockdown persists, there will be additional support.

“It’s really important that we don’t crush the recovery before it’s happened and … in order to keep people’s jobs going … to keep companies going, we need to continue providing support.”

Kwarteng also said there would “perhaps” be an extension of the reduced – 5% – rate of VAT for the hospitality sector, also due to end in 31 March.

Chancellor Rishi Sunak signalled the furlough extension on Sunday morning TV shows. He told Sky TV’s Sophy Ridge: “The prime minister in the roadmap set out a path for us to recover and reopen and I want to support people and businesses along that path … I want to make sure people realise that we are going to be there to support them and if you look at our track record, we went big, we went early and there is more to come next week.”

A key date for gauging progress against the roadmap is April 15: the deadline for vaccinating everybody aged 50 and over. If this deadline is missed then, the government has said, other stages of lockdown easing might have to be delayed, which could prolong the need for business support measures past 21 June.

Sunak said the culture sector, which has long felt neglected because of Brexit issues as well as the pandemic, would be a significant driver of any recovery.

He is expected to put an extra £300m into the £1.57bn Culture Recovery Fund, with England’s museums and cultural bodies also receiving £90m to keep going until they can open their doors on 17 May at the earliest – plus £18.8m provided for community cultural projects. The sector employs about 700,000 people.

Sunak is also likely to deliver in the budget a £150m Community Ownership Fund so communities can bid for up to £250,000 to save pubs and sports clubs in danger of going out of business.

Meanwhile, debate over the possibility of tax rises is raging within the Conservative party. Former Brexit secretary David Davis, has stated that tax rises would impede recovery and he will oppose such moves in parliament.

Former Conservative leader Lord Hague, on the other hand, told the Daily Telegraph that “at least some business and personal taxes” would have to rise.