Rishi Sunak the Chancellor announced in the House of Commons on Tuesday afternoon the furlough scheme will be extended until October.
Sunak told MPs the furlough job retention scheme includes workers who are going to work part time.
Sunak told MPs, “I can announce today that the Job Retention Scheme will be extended for four months, until the end of October.
“By that point we will have provided eight months of support to British people and businesses.
“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 can agree with employees who are eligible to furlough them if they are unable to maintain their current workforce.
Employees who are eligible can claim 80% of their salary up to a maximum of £2,500 each month, which also covers National Insurance and pension contributions.
Richard Burge, Chief Executive of London Chamber of Commerce and Industry said, “This is another welcome intervention from the Chancellor, which will continue to help to limit the cost of business outgoings, at a time when many are losing money on a daily basis.
“The support, including the part-time work potential, will provide some companies with breathing space as they begin to try and generate revenue again, as and when the Government’s health-led rebuild plan allows.
“But others will sadly still face tough choices over the coming weeks and months, as losses are mounting despite support.”
Torsten Bell, chief executive of the Resolution Foundation think tank and an early advocate of the scheme, said, “Moving too quickly could spark a huge second surge in job losses at a time when unemployment already looks set to be at the highest level for a quarter of a century.
“This policy has made a huge difference in this crisis. It now needs careful and gradual change to ensure the benefits it has provided are secured rather than squandered.”
The furlough scheme has so far cost the taxpayer £8bn as around 6.3m people are currently receiving up to 80% of their salaries.
The managing director of leisure operator GLL Mark Sesnan warned, “Industries such as leisure and hospitality [must be] protected.
“This is because, in order to adhere to social distancing guidelines, we will have to operate at a significantly reduced capacity.
“In turn, this will have a major impact on the number of staff able to return to work fully.”
Lord Mervyn King, the former governor of the Bank of England, told BBC Radio 4’s Today programme, “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.”