The end of furlough is nigh - but is Norfolk ready?

This week marked the end of the scheme as companies knew it, with government now footing the bill for 70pc of wages.

Over the coming months this will decrease further with the scheme winding down by September.

And experts have warned that retracting support too soon will damage businesses and individuals alike.

Elena Magrini, senior analyst at think tank Centre for Cities, said: "The furlough scheme was not just good for businesses - it kept a lot of people who would otherwise be in serious debt out of it. Instead people have saved and in time will release that cash into the economy, thus creating more demand and jobs.

"The government is right to scale back support if their plans to fully reopen the economy go ahead. However, if businesses are still operating under restrictions they cannot be expected to do so without any help.

"It would create unemployment for those currently on furlough, through no fault of businesses which otherwise would have cash running through them."

And Steve Magnall, director of independent bakery brand The Two Magpies which have sites across Norwich, Holt and Blakeney, said: "It's been a godsend, that's undeniable. I've opened two new sites this year to make the most of the opportunity with pent-up demand, and I don't think I would have done that if it hadn't been for furlough.

Owners of Two Magpies Bakery; Rebecca Bishop and Steve Magnall. Picture: Archant (Image: Archant)

"The real shock will be a return of business rates and VAT rises - the high street was being decimated by online retailers before the pandemic and this was an advantage. It would be a real win if those policies could be looked at."

Chris Starkie, Chief Executive of New Anglia Local Enterprise Partnership, agreed: “The furlough scheme has, without a doubt, supported thousands of businesses and workers across our region through the past 15 months and it will continue to support many over the summer.

Chris Starkie, chief executive of New Anglia LEP (Image: Archant)

“At its height in May 2020, about 22% of employees in Norfolk and Suffolk were furloughed. Since then, many businesses have been able to reopen. However there are still challenges in the hospitality, leisure and tourism sectors where firms may have reopened but are not able to trade at capacity, so may not yet require all of their staff."

• Furlough Q&A

What's changed?

From July 1, businesses across Britain will have to start making compulsory contributions to pay.

The government's pay falls to 70pc for the first time this year.

The monthly limit of £2,500 will stay in place, so employees will not notice the difference.

What happens next?

From August, the support falls once again.

Firms will be asked to contribute 20pc of the 80pc paid to staff, as well as tax and pension contributions.

The government will, however, top up the remaining 60pc of earnings up to £1,875.

When does it end?

The scheme is set to end in September, though calls are already being made to extend furlough after delays to lockdown.

Labour’s shadow chief secretary to the Treasury Bridget Phillipson said: “A month’s delay (to easing lockdown) may seem like a short time, but for businesses in retail, hospitality and leisure, legally closed from trading or relying on the summer season, the delay is another blow.

“The government must make sure economic measures go hand in hand with public health measures and that our British businesses and high streets are not left out in the cold.”