Rishi Sunak ‘to ask employers to start paying a fifth of wages’ from August

Firms will be asked to pay a 20 per cent of the wages of employees on the UK Government’s furlough scheme from August, Chancellor Rishi Sunak is expected to announce.

Under plans set to be unveiled in the coming days, the Treasury will announce that it is paring back the Coronavirus Job Retention Scheme amid concerns about its spiralling cost to the public purse.

More than eight million workers have so far been furloughed under the scheme, which sees the state step in to pay 80 per cent of an employees’ wages up to a maximum of £2,5000 a month.

Figures released this week show that the scheme has already cost £15bn.

According to The Financial Times, Sunak will make an announcement within days on reducing the level of government support.

He is expected to say that from August firms will be asked to start paying 20 per cent of staff wages, their National insurance contributions and their pension contributions - meaning furloughed staff would continue to receive the same wages as before, but with a reduced state share.

The scheme is also expected to be closed to new entrants from the end of June, and all employers currently on the scheme will be required to start paying.

The Coronavirus Job Retention Scheme has already been extended to October from its original cut-off date of June, but Treasury sources have indicated that the October end date will be definitive.

Sunak has warned that the UK is facing a “very serious economic crisis” in the wake of the COVID-19 shutdown, with the UK economy already shrinking by two per cent in the first three months of 2020.

The Chancellor said earlier this month: "It is now very likely that the UK economy will face a significant recession this year, and we're already in the middle of that as we speak."