personal finance

Rishi Sunak addresses furlough loophole and explains 'big part' of reason for cut-off date


The coronavirus crisis is having a devastating impact in the UK, with more than 7,000 people having died from COVID-19 in the UK. The epidemic is also having a financial impact too – with the Department for Work and Pensions (DWP) having reported a surge in demand for Universal Credit in recent weeks.

The Chancellor of the Exchequer Rishi Sunak last month announced a number of emergency measures for those adversely affected financially by the crisis.

This includes the Coronavirus Job Retention Scheme, for employees on a PAYE payroll scheme on or before February 28, 2020.

Under this scheme, employers can furlough employees and apply for a grant covering 80 percent of their ususal monthly wage costs, up to £2,500 a month.

Today, the Chancellor updated the UK on the coronavirus crisis, announcing a £750million package for UK charities.

READ MORE: Martin Lewis responds to shocking furlough case: ‘Your company are abusing system’

Mr Sunak said that of this, £360million will be directly allocated by government departments, while £370million will go to smaller charities.

During the press conference, the Chancellor was asked about a warning that the Coronavirus Job Retention Scheme could be open to fraud and abuse.

Mr Sunak replied: “We’re obviously designing schemes at pace which haven’t been done before.

“Part of the reason that we’ve made some of the decisions that we’ve made in the design of whether it’s the Job Retention Scheme or the self-employed are deliberately to counter fraud, because obviously we want to make them as simple as possible and as accessible to as many people as possible, whilst protecting the taxpayer – because ultimately this is all of our money that will need to be paid back at some point.

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“It means that there are people who are saying, ‘Well can you not do it this way? Can you include us?’ The reason we’ve not been able to do that is to protect against exactly that – the risk of fraud or spurious claims that we won’t be able to verify, or only verify with a very cumbersome manual process, which would delay the scheme’s implementation which is not the right thing.

“So, I’m confident that the decisions that we’ve made will minimise the risk of fraud.”

Mr Sunak added that it is for this reason why a particular cut-off date has been stipulated in the eligibilty for the scheme.

Due to employees needing to have been on a PAYE payroll scheme on or before February 28, 2020, some who had voluntarily left their job in February and March have reported former employers being unwilling to reinstate them for the purposes of the scheme.

Last week, HM Treasury provided some official clarification. A government spokesperson said: “The Coronavirus Job Retention Scheme is aimed at those who would otherwise be unemployed as a result of coronavirus.

“It allows for those who were on the payroll of a company on 28 February but subsequently left to be put back on payroll and furloughed.

“Decisions around whether to offer to furlough someone are down to the individual company.”

Addressing the potential for fraud today, Mr Sunak continued: “That’s why we’ve made some of the choices we’ve made, and hopefully people will understand that, and hopefully they’ve been reasonable about that when I’ve explained, ‘Well this is why you have to have been employed on this particular day’.

“Because if you weren’t, then obviously there is the risk that you could create a brand new employment for someone who we’ve never heard of before and suddenly start getting employment from the taxpayer for not a genuine case.”

Mr Sunak added that ‘a big part’ of the reason for choosing the cut-off date of February 28 for the Coronavirus Job Retention Scheme was due to reducing the risk of fraud.

This week, Martin Lewis publicly begged the Chancellor to make a “small tweak”, which would enable new starters to be eligible under the scheme – should their former employer refuse to reinstate and furlough them.

It came as a This Morning viewer asked: “Is there any indication the guidelines for the government retention scheme could be adjusted to help the thousands not entitled due to moving jobs?

Mr Lewis explained that he and others had put the issue to the Chancellor on Twitter, and said: “I hope we see the Chancellor move.”

Making a plea to help those affected, he then said: “Chancellor, if you are watching, please – this is a small tweak and it would help a lot of people.”

Have you been affected financially by the coronavirus crisis? If you’re interested in sharing your story, please get in touch by emailing personal.finance@reachplc.com.



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