London Daily

Focus on the big picture.
Friday, Sep 04, 2026

Rishi Sunak rejects calls by businesses for furlough extension

Rishi Sunak rejects calls by businesses for furlough extension

Failure to maintain Covid support measures will push firms into bankruptcy, says Labour
Rishi Sunak has rejected business demands for an extension of the furlough scheme and business rates relief, despite a four-week delay in the easing of Covid-19 restrictions previously set for 21 June.

Business leaders and Labour said failure to maintain emergency economic support measures in line with public health restrictions would push struggling businesses into bankruptcy and risk thousands of jobs.

It came as Boris Johnson announced the government roadmap out of lockdown in England would be delayed by up to four weeks, amid a rapid rise in cases of the Delta Covid variant first detected in India.

With only a week before all pandemic restrictions were due to be removed, sources close to the chancellor said he believed sufficient economic support measures were already in place to cope with a delay. Two sources said Sunak had intentionally “gone long” at the March budget by announcing furlough would last until September for exactly this reason.

However, the scheme will force employers to contribute 10% of an employee’s wage from the start of July, rising to 20% in August, as taxpayer support is cut from the current level of 80%. Employees will continue to receive the same amount.

A business rates holiday will end at the same time, while commercial landlords can also demand rent in full from 1 July – when a moratorium on demands for commercial rent arrears expires – unless the government brokers a deal spreading the financial burden. Officials are understood to be trying to reach an agreement by the end of the week that would mean landlords accepting they will never recover some rent accrued during the pandemic.

Ed Miliband, the shadow business secretary, said many businesses are worried about economic support being removed while they are still unable to trade or profit. “The price of any delay to the roadmap must not be paid by businesses,” he said.

“Nightclubs and live music venues, many restaurants and bars, the events, arts and wedding industries are still seriously affected by restrictions but they have repeatedly been left in the dark about economic support. It must remain in step with public health restrictions.”

Kate Nicholls, chief executive of trade body UK Hospitality, said the combination of rent payments and the reintroduction of business rates – albeit at a reduced rate – could be a “final nail in the coffin” for some firms.

“That will be a real problem where you suddenly have a big amount of money to pull out but your revenues are still suppressed,” she said.

The hospitality industry has previously warned that a four-week delay to the easing of restrictions – including an end to limits on how many people can meet indoors – could cost struggling businesses £3bn and put 200,000 jobs at risk.

Dr Roger Barker, the director of policy at the Institute of Directors, a business lobby group, said: “We are now approaching a cliff edge, with government support for business ending or beginning to taper off. It is vital that this support is pushed out commensurately with the lockdown extension.”

The Treasury is understood to believe there are sufficient support measures targeted at businesses in the hardest-hit sectors of the economy, with millions of pounds still available for struggling firms through local authority grants and the government’s £1.57bn cultural recovery fund for theatre and arts venues.

Retail, hospitality and leisure businesses have been offered 100% relief on business rates – the tax paid on the premises they occupy – since last March. It is due to be cut to 66% from 1 July but will remain in place until the end of March 2022.

The chancellor’s resistance to a furlough extension also comes as hospitality businesses report problems with finding enough workers, amid widespread shortages across the country after the easing of lockdown this spring.

While millions have come off furlough in recent months, more than 2.1 million people were still on emergency coronavirus job support in mid-May – including up to a fifth of the total hospitality workforce.

Unemployment in the UK has stabilised in recent months, helped by the extension of furlough. The latest official figures show that 1.6 million people were out of work in the three months to March. This represents 4.8% of the workforce, down from 1.7 million in the three months to February.

The Bank of England expects the jobless rate to peak at almost 5.5% after furlough ends, compared with 4% – or about 1.3 million people – before the pandemic.

The figures fall a long way short of the initial fears, last year, that unemployment could reach 12% as a result of what was expected to be the worst recession in 300 years.

A spokesperson for the Treasury said: “The furlough scheme is in place until September – we deliberately went long with our support to provide certainty to people and businesses over the summer.

“The number of people on the furlough scheme has already fallen to the lowest level this year, with more than 1 million coming off the scheme in March and April – showing our plan for jobs is working.

“Businesses can also continue to access other support including business rates cuts, VAT cuts and our recovery loan scheme.”
Newsletter

Related Articles

0:00
0:00
Close
Scottish Tech Company PureLifi Enters Administration With More Than 40 Job Losses
Scottish Government Names Alyn Smith Innovation and Education Minister
Green Party Co-Leader Zack Polanski to Contest By-Election for Keir Starmer’s Former Seat
Palestine Action Activists Appeal Terrorism-Related Prison Sentences
PwC Report Highlights Persistent Regional Spending-Power Divide Across Britain
UK Names Hundreds of Employers for Minimum Wage Violations
UK Commits £400 Million to International Tropical Forest Fund
UK Extends £2 Bus Fare Cap Across England Through 2027
UK Warns Travellers as US-Iran Tensions Disrupt Middle East Security and Shipping
Andy Burnham Faces Kemi Badenoch in First Prime Minister’s Questions
Kemi Badenoch Names Andrew Griffith Shadow Chancellor in Conservative Reshuffle
UK Treasury and Markets Focus on Fiscal Headroom Ahead of Autumn Budget
UK Government Reverses Early Release Plans for Serious Violent and Sexual Offences
UK and France Review Border Cooperation After 48,000 Small-Boat Crossings Prevented
UK Growth Outlook Weakens as Inflation and Energy Costs Rise
Breeding Tropical Mosquitoes Discovered in East London
Sadiq Khan Agrees to Search of Digital Communications in Palantir Lawsuit
Scottish Protesters Call for Moratorium on AI Data Centre Expansion
Uber Drivers Bring London Class Action Over Algorithmic Management
Reform UK Accepts £4 Million Donation From Cryptocurrency Billionaire Pardoned by Trump
Justice Secretary Tightens Early Release Scheme to Exclude Manslaughter Offenders
Kemi Badenoch Reshuffles Conservative Team as Reform UK Pressure Grows
British Mortgage Rates Rise as Global Bond Sell-Off Pushes Up Borrowing Costs
UK Records Hottest Summer on Record in 2026
UK Government Urges Households to Stock Essential Supplies Ahead of Severe El Niño Risk
UK Prepares Targeted Sanctions Over Israeli Settlements in West Bank
Reform UK Faces Electoral and Police Scrutiny Over Foreign Donation Allegations
UK and France Expand Channel Migration Cooperation as Trade Tensions Surface
UK Marks Merchant Navy Day With Tribute to Civilian Seafarers
Burnham Pays Tribute to Two Police Officers Killed on Duty in Northern England
Booking.com Left Fake Downing Street Listing Online for Two Months, Which Says
Burnham and Macron to Review UK-France Cooperation on Channel Crossings
UK Business Confidence Improves Slightly but Investment Concerns Persist
Burnham Faces Pressure Over Future North Sea Oil and Gas Licences
Burnham Pushes Wider English Devolution Through ‘Number Ten North’
British Chambers of Commerce Raises 2026 UK Growth Forecast to 1%
Keir Starmer Resigns as Holborn and St Pancras MP, Triggering By-Election
UK Chancellor Faces Tighter Budget Headroom as Long-Term Borrowing Costs Rise
UK Government Weighs Thames Water Nationalisation as Financial Crisis Deepens
Prime Minister Andy Burnham Faces First Commons Questions Over Tax and Spending Plans
Eleven British Seafarers Receive Merchant Navy Medal
Which? Creates Fake 10 Downing Street Rental Listing to Expose Booking.com Vetting Weaknesses
BP Appoints New Chairman in Effort to Stabilise Leadership
Aberdeen Sells Hydrogen Bus Fleet at Heavy Loss After Green Transport Experiment
UK Records Hottest Summer on Record as Climate Change Intensifies Extreme Heat
Scotland Pledges to End Temporary Accommodation for Children and Build 111,000 Affordable Homes
DNO Agrees $396 Million Deal to Acquire Capricorn Energy
Uber and Wayve Launch UK’s First Supervised Autonomous Ride-Hailing Service in London
Britain Expected to Avoid New US Tariffs Targeting European Union
Middle East Conflict Pushes UK Energy Costs Higher and Revives Inflation Concerns
×