Rishi Sunak had announced changes to the furlough scheme.
The Chancellor told the Downing Street daily coronavirus press conference: “As we reopen the economy, there is broad consensus across the political and economic spectrum, the furlough scheme cannot continue indefinitely.”
Mr Sunak said the schemes had been a “lifeline” for millions of people and businesses, but that as the country comes through the “other side” of the Covid-19 crisis, it was time to adjust them to “ensure those who are able to work can do so”.
He has extended the self-employment income support scheme – which has so far seen 2.3 million claims worth £6.8 billion – enabling freelancers to access grants of up to £6,570 from August. Individuals could claim up to £7,500 under the first grant, which launched earlier this month.
And the Chancellor said that businesses will have to start paying National Insurance and tax contributions for staff in August, ramping up to 10% of furloughed wages in September and 20% in October.
Employees on furlough will keep getting 80% of their wages up to £2,500 a month.
Mr Sunak also revealed that workers can return part-time without losing any furlough payments from July – a month earlier than previously planned, following lobbying from businesses.
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But businesses must start bearing the costs, and from August all companies using the furlough scheme must start paying National Insurance and employer pension contributions.
Mr Sunak said: “Our top priority has always been to support people, protect jobs and businesses through this crisis. The furlough and self-employment schemes have been a lifeline for millions of people and businesses.
“We stood behind Britain’s businesses and workers as we came into this crisis, and we stand behind them as we come through the other side.
“Now, as we begin to re-open our country and kick-start our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world.”