Businesses give back more than £1bn claimed through furlough scheme

Businesses have handed back more than £1 billion claimed through the Government’s furlough scheme, the Treasury has said.

In the past three months alone, firms returned £300,000 because the funds had been overclaimed or they no longer needed the cash.

It takes the total returned to HM Revenue and Customs (HMRC) since July 2020 to £1.3 billion.

With the furlough scheme due to close at the end of the month, Chancellor Rishi Sunak said it was “heartening” that so much had been paid back.

“This Government stepped in to help when people needed it most, supporting 12 million jobs through furlough,” he said.

“This worked. Nearly two million fewer people are now expected to be out of work in the UK than previously feared.

“Now with our recovery under way it is heartening to see that £1.3 billion in furlough grants have been returned as the economy recovers.”

But while £1.3 billion has been returned by businesses, it is just a small proportion of the mammoth £68.5 billion overall cost to the Government of the scheme so far.

Nigel Morris, employment tax director at MHA, said the bill will likely hit £70 billion by the end of this month, which he estimated is nearly double the UK defence spend in 2018-19.

He said it was a “staggering amount of money and for the most part good value”, but cautioned firms against being caught out by incorrect furlough claims that could result in costly clawbacks by HMRC.

He said: “The advice to all businesses, as the scheme ends, must be to review all their furlough claims and ensure that if they have overclaimed, they make arrangements to pay HMRC back as soon as possible.

“This should help to avoid interest and penalties. HMRC and the National Audit Office estimate between 5% and 10% of the total furlough money claimed could represent overclaims.”

HMRC is also clamping down on fraudulent claims through its 1,250-strong taxpayer protection taskforce.

The latest repayment figures come as the furlough scheme is set to be wound up from September 30.

Recent data showed around 1.6 million people were on the support at the end of July, down from nearly nine million at the height of the pandemic last year.

Around 340,000 people moved off furlough during July alone, which was the first month that employers had to pay 10% of the salaries of their furloughed workers, giving them an incentive to bring staff back, or end their employment.

Employer contributions under the scheme went up again to 20% for August and September.

Furlough launched in the early days of the pandemic as a way of ensuring that people could keep their jobs, and a portion of their income, even when the economy closed down.

Since launching 18 months ago, close to 12 million jobs have been furloughed and more than 1.3 million businesses have received the support.