The scheme, which allows employers to claim for a cash grant of up to 80% of a furloughed employee's wages capped at £2,500 a month, was due to run until the end of June, but the Chancellor had been under increasing pressure in the last two weeks to prolong it further or risk mass redundancies across various sectors, including hospitality.
Speaking in the House of Commons this afternoon (12 May), Sunak said the Government believes in the dignity of work, and is doing all it can to protect people who cannot work.
The Chancellor confirmed that the JRS would be extended in its current form until the end of July, and then continue in August, September and October with "greater flexibility”.
From August, firms will be able to bring staff back to work part time; under the current scheme, furloughed employees cannot work.
The Chancellor also said that from August, employers would need to “share with the government the cost of paying salaries”, suggesting the level of state support will gradually be reduced.
Full details regarding the changes will be available by the end of May, but Sunak assured furloughed workers they will continue receiving the same level of overall support.
Regarding the extension, Sunak said: “I won’t give up on the people who rely on it. Our message today is simple. We stood behind Britain’s workers and businesses as we came into this crisis, and we will stand behind them as we come through the other side.”
To date, some 7.5 million people in the UK have been furloughed, including 2.4 million workers from the hospitality sector.
Commenting on today’s announcement, UKHospitality Chief Executive Kate Nicholls said: “An extension of the scheme is a sensible, positive and timely move. The scheme has been a crucial lifeline for many businesses and employees. It has helped hospitality overcome the initial crisis, saved businesses and kept jobs open.
“We will now be actively engaging with Government about how the scheme will operate beyond July. The full 80% may need to be extended past July for some businesses in sectors like hospitality that will still operate at much reduced levels of trade, or not yet be able to open. Our businesses will need as much warning as possible if they are to be expected to plan ahead for eventual venue re-openings.
“Increased flexibility for hospitality will be equally vital. Hospitality businesses are not able to go from standstill to full capacity overnight. The additional flexibility being introduced to the scheme will allow our workers to return to work in a safer, graduated way – that is crucial to help the Government to safeguard public health, jobs and businesses."