Furlough scheme extended at 80% until October 2020!

Furlough scheme extended at 80% until October 2020!

Rishi Sunak today extended the government’s massive coronavirus bailout to October despite fears about the spiralling cost.

The Chancellor said the multi-billion pound subsidy, which had been due to end next month, will stay in place for four more months, and it will still cover 80 percent of wages up to a ceiling of £2,500 a month.

With concerns the scheme is costing £14 Billion a month – roughly equivalent to the NHS budget – Mr Sunak also told the Commons that from August it will be available for workers who go back part-time, in a bid to ‘wean’ businesses off the support.

Firms will have to cover a proportion of wages if they take advantage of the ‘flexibility’, he said.

‘Nobody who is on the furlough scheme wants to be on this scheme. People up and down this country believe in the dignity of their work, going to work, providing for their families, it’s not their fault their business has been asked to close or asked to stay at home,’ Mr Sunak said.

The announcement came despite speculation has been mounting that he would cut the proportion of pay to 60 per cent after the existing end date of July, as ministers urge people to return to work and loosen the lockdown strangling the economy.

Unveiling the move on his 40th birthday, Mr Sunak told MPs: ‘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 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.’

The Treasury has been looking at ways to cut back the scheme that is paying up to 80 per cent of wages, up to a maximum of £2,500 per month.

But Mr Sunak previously vowed there will be no ‘cliff edge’ to the support, but admitted the scale of the bailouts are not ‘sustainable’.

The Trades Union Congress hailed the announcement, saying the government ‘has listened to unions and extended the job retention scheme till autumn’.

‘Govt will still cover 80% of wages and has changed the rules to support short-time working, which is key to a gradual, safe return to work,’ the TUC said.

‘A big relief to millions of working families.’

Shadow chancellor Anneliese Dodds seemed taken aback by the step, saying she had only heard about the Chancellor’s changes ‘in the last few seconds’ and will examine them ‘very, very carefully’.

Ms Dodds said people do not want to be furloughed, adding in the Commons: ‘It’s critically important they are not penalised for that choice. We welcome the flexibility mentioned, we’ve asked for this repeatedly.’

She said many had been angered by comments attributed to Government officials suggesting people need to be ‘weaned off an addiction’ to the furlough scheme.

Earlier, former Bank of England governor Lord King warned this morning that the scaling down of the furlough arrangements should be linked to the state of the economy, not any particular timeframe.

‘The furlough scheme ought to be linked to the performance of the economy and not to a particular calendar timetable,’ he told BBC Radio 4’s Today programme.

He said the proportion of wages covered should stay at 80 per cent.

‘I don’t think it makes sense to regard this as the major cost of the Covid-19 crisis in economic terms,’ he said.

‘These payments under Government schemes are transfers from taxpayers in general to businesses, it will lead to an increase in national debt (but) we can finance that over a long period, particularly given the very low level of long-term real interest rates.

‘The real cost of this shutdown is not measured by the impact on the public finances but by the lost incomes and outputs in the economy, a cost which is likely to end up as an order of magnitude (though no one can really know this) of several hundred billion pounds. That’s an enormous cost.’

Boris Johnson’s roadmap for releasing the lockdown, published yesterday, suggested that hospitality businesses and others like hairdressers and gyms, face being closed until July at the earliest.

Taking questions from MPs, Mr Johnson said: ‘I do think that the furloughing scheme has been one of the most remarkable features of the Government’s response and it is unlike anything seen internationally.

‘Six-and-a-half million people currently are being supported. It is absolutely right that we should do it.

‘I don’t want to anticipate what (Mr Sunak) is going to say but the House will hear more about that tomorrow.’

The current version of the scheme was due to expire at the end of June, with firms able to claim 80 per cent of a furloughed worker’s wages up to a monthly cap of £2,500.

 First announced in March, the move was opened for three months, backdated from March 1 to the end of May, and was later extended by a month until the end of June.

Deputy Labour leader Angela Rayner told Today the furlough cover should continue ‘as long as we need it’.

Ms Rayner added: ‘We can’t afford not to do it correctly. I think it is really important the Chancellor continues with the good practice of making sure that furlough scheme is in place and doesn’t try and reduce it too soon, because that will cost us in the longer term.

‘Many families wouldn’t be able to survive right now if it wasn’t for things like the furlough scheme, it is absolutely right the Government has stepped in but they can’t now pull the rug from underneath people’s feet – they have to continue to support people throughout this crisis.

‘We will have to look at how the economy recovers, but it is not going to recover quickly enough if we pull the rug from people now and people end up destitute and we end up having that R rate spiking again and back in lockdown.’

Asked about the continuation of the furlough scheme, Health Secretary Matt Hancock told Sky News: ‘We have said that shouldn’t be a cliff-edge in the furlough scheme, but at the same time, we do need to try to get the economy back to something more like normal.’

Source: Daily Mail – 12/05/2020

 

 

Bounce Back Loan Scheme (BBLS)

Bounce Back Loan Scheme (BBLS)

As of the 4th May 2020, the new government backed loan scheme was launched to assist UK businesses that were struggling to obtain funding under the existing CBILS scheme.

The facility is designed to offer the lenders a 100% guarantee from the UK Government which then allows the lenders to reduce the credit checks needed to advance funds to those most in need of these loan funds.

The scheme offers loans from £2,000 to £50,000 and is based on a 6 years loan term with the first year being payment free (that is no interest of capital repayments until month 13). The government pay the lender the first year’s interest due as well as the lender arrangement fees.  The fixed rate of interest rate has been set by the Chancellor of the Exchequer at 2.5% APR.

The facility is initially only being offered through the High Street banks and so does not allow us to act for clients in making the application. The process is deliberately straightforward and includes several declarations, that are certified by the applicant, as the method of quickly producing the acceptance by the bank.

We do however remain committed to securing fast track acceptances through the CBILS portal which can be found here – CBILS Application Portal

 

To assist our clients and website users there is a handy reference chart below with direct links to the lender’s application pages.

NatWest Apply Now
Lloyds bank Apply Now
Santander Apply Now
Barclays Directly apply though the online business banking app
Clydesdale bank Apply Now
HSBC Apply Now
Bank of Scotland Apply Now
TSB Bank Apply Now

As the list expands, we will update this page and if we are asked to assist our clients in delivering this scheme in the future, we will provide a link to our own application portal.

If for some reason you are not able to secure a BBLS for your business, please contact us or complete a CBILS application to see if that is a better route for your business.

The Coronavirus Business Interruption Loan Scheme (CBILS) is managed by the British Business Bank on behalf of, and with the financial backing of the Secretary of State for Business, Energy and industrial Strategy (BEIS). Full details on CBILS and the list of participating CBILS Lenders can be found on the British Business Bank website here.