Chancellor Rishi Sunak has confirmed that he will extend the furlough scheme until the end of March 2021.

Mr Sunak said the scheme will pay up to 80% of a person’s wage up to £2,500 a month and this arrangement will be reviewed in January 2021.

The scheme, in which employees receive four-fifths of their current salary up to a maximum of £2,500 of hours not worked, was originally scheduled to end last month.

This was extended when Prime Minister Boris Johnson announced a new four-week lockdown in England last weekend (Saturday 31st October 2020)

Addressing MPs in the Commons today, Rishi Sunak announced a further extension into next year.  The Chancellor told the Commons his intention was “to give businesses security through the winter”.

“The security we are providing will protect millions of jobs,” he added.  Mr Sunak’s statement comes after the Bank of England said it was pumping an extra £150bn into the economy.

“Our highest priority remains the same: to protect jobs and livelihoods,” he told MPs.

And in an attempt to pre-empt criticism over another U-turn, Mr Sunak said he needed to make “rapid adjustments” to the Government’s economic response to the COVID-19 pandemic because of how the virus has spread.

“I know that people watching at home will have been frustrated by the changes the government has brought in during the past few weeks,” he said.

“I have had to make rapid adjustments to our economic plans as the spread of the virus has accelerated.”

The Chancellor said the second lockdown – which was the “only viable solution left to protect our NHS” – had necessitated a change in approach.

He told MPs: “And so given these changed public health restrictions and the economic trauma they would cause in job losses and business closures, I felt it best to extend the furlough scheme rather than transition at that precise moment to the new job support scheme.

“Political opponents have chosen to attack the Government for trying to keep the economy functioning and to make sure the support we provide encourages people to keep working.

“And they will now no doubt criticise the government on the basis that we have had to change our approach. But to anyone in the real world that’s just the thing you have to do when the circumstances change.

“We all hope for the best but make sure we plan for any eventuality.”

As a result of this further extension, the Job Retention Bonus –a £1,000 one-off payment to firms that had retained previously-furloughed staff until the end of January 2021 – would be scrapped for now and replaced with a new “retention incentive” that would be deployed at an “appropriate time”.

About £40bn has been spent on the furlough scheme since it was introduced in March and it has been about 9.6 million people having benefited from the scheme to date.