Budget cancelled as Rishi Sunak is set to address Commons over furlough scheme

23 September 2020, 17:39 | Updated: 23 September 2020, 20:55

Rishi Sunak will make a statement to Parliament tomorrow as speculation mounts that he will announce a replacement for the furlough scheme.

It comes amid the announcement that a second 2020 Budget this autumn has been scrapped.

The budget, which was expected in the next month, would have spelt out a long-term plan for after the pandemic.

The Chancellor has previously said that furlough will end on October 31, however this has since been criticised by both unions and the opposition who say it will lead to mass unemployment.

Speculation has since grown that the Mr Sunak could announce a new wage subsidy scheme after Boris Johnson announced a wave of new lockdown rules.

Read more: Is the furlough scheme going to be extended by Chancellor Rishi Sunak?

The Chancellor is said to be looking at a 'short working hours' scheme where workers would remain part-time and have some of their wage subsidised by the government.

It is also predicted that he could extend support to businesses in the form of loans and grants.

The Chancellor tweeted: "As our response to coronavirus adapts, tomorrow afternoon I will update the House of Commons on our plans to continue protecting jobs through the winter."

The statement is expected at around 12.30pm tomorrow.

The Guardian has reported Mr Sunak is looking at a scheme like in Germany, where workers are kept on shorter hours - and then have part of their wage made up by the government.

It would subsidise people who work 50 per cent to 60 per cent of their normal hours, to spread out work and cut the need for redundancies.

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The furlough scheme has cost the Government £39.3 billion to date, with £3.9 billion between August 16 and September 20 alone, according to the latest figures.

More than £13 billion has been handed to firms and workers through five different Government support schemes in the last month.

The SNP call for an immediate extension to the furlough scheme

When asked if the government was considering the German-style short working hours scheme, Boris Johnson’s spokesman said: “We’ve always said we would keep our support under review and it would be adapted as the circumstances evolved.”

And at Prime Minister's Questions on Wednesday, Boris Johnson told the Commons: “Of course the government is going to come forward with further measures."

He added: “I don’t think it would be sensible simply to extend the current, existing furlough scheme in its present form beyond the end of October.

"But we will do everything we can do support businesses, to support those in jobs, and indeed the self employed.”

A string of public figures including Bank of England governor Andrew Bailey have called on the government to “stop and rethink” furlough after October 31.

The Trades Union Congress (TUC), which outlined its furlough replacement proposal last month, said the Government must "fast-track a new plan" to protect jobs.

TUC general secretary Frances O'Grady said: "We have published detailed proposals for a new short-time working and upskilling scheme.

"With the right approach we can stop mass unemployment scarring millions.

"My message to ministers is clear: let's get around the table and fast-track a new plan."

John Phillips, acting general secretary of the GMB union, said: "Other countries have made a head start in offering support, protection and reassurance to industries as our economy stands on the edge of the abyss.

"The Treasury has promised creative action in this extended, unprecedented period - but time is short.

"Ministers must target support for industries, support for incomes and take action to save jobs."