May 11, 2020 / 3:24 PM / 22 days ago

UK to set out future of costly coronavirus furlough scheme on Tuesday

LONDON (Reuters) - Britain’s government will set out on Tuesday how it plans to continue a programme that is paying the wages of more than 6 million workers at businesses affected by the coronavirus, Prime Minister Boris Johnson said on Monday.

Britain's Prime Minister Boris Johnson leaves 10 Downing Street, following the outbreak of the coronavirus disease (COVID-19), London, Britain, May 11, 2020. REUTERS/Toby Melville

The Coronavirus Job Retention Scheme, which pays employers 80% of the wages of staff who are on temporary leave, is due to run until the end of June.

The programme has been extended by one month already, and finance minister Rishi Sunak said last week there would be no cliff-edge end to it.

“The House will hear more about this tomorrow,” Johnson told Britain’s lower house of parliament.

“It has been one of the most salient, most important features of this country’s response so far to this crisis, that we have looked after the lowest-paid people in our society, and the hardest-working, and we will continue to do so,” he added.

Sunak is due to answer questions about the economic response to COVID-19 in parliament on Tuesday afternoon.

Last week, the Bank of England said the economy could shrink by more than a quarter during the three months to June, and unemployment approach 10% of the workforce, even with the benefit of the job support programme.

The scheme covers around a quarter of Britain’s private-sector workforce and is the costliest single measure to support Britain’s economy at a time when many businesses have been forced to close due to the coronavirus.

Government budget forecasters estimate it will cost around 49 billion pounds ($60 billion) up to the end of June.

Johnson said on Monday that coronavirus infections had peaked, and that people who could not work from home should return to their workplaces if possible.

London’s Evening Standard newspaper reported last week that the government was considering reducing the contribution it pays towards furloughed staff’s wages to 60% from 80%.

But employers are not obliged to make up the difference, and there is no guarantee this cut would make them more likely to bring staff back full-time if economic demand remains weak.

Employer groups have called on the government to make the programme more flexible and allow staff to return part-time.

Most shops and other businesses formerly open to the public remain closed, while others that are allowed to operate - such as construction sites, factories and takeaway restaurants - have temporarily shut while they develop safe working practices.

A government timetable released on Sunday does not envisage sit-down cafes or restaurants reopening before July, while pubs and bars could take much longer.

Reporting by David Milliken; Editing by Kylie MacLellan and Stephen Addison

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