BUSINESSES will now have to start paying towards the cost of their furloughed workers, the Chancellor has announced. 

In a bid to reduce the Treasury’s hefty spending bill, Rishi Sunak has told employers that the government will cut back its share of the job retention scheme from August.

But the Chancellor has been warned that his changes to the system “could cost countless jobs across the UK.”

Announced at the beginning of the lockdown, the unprecedented support has so far covered the wages of around 8.4 million workers.

It's cost the government more than £15 billion.

Currently, the furlough scheme sees the government pay employees put on furlough by their employers 80% of their salaries, up to £2,500 per month.

For the next two months the scheme will continue as before, with no employer contribution at all.

But in August, while the taxpayer’s contribution will stay at 80%, employers will be asked to pay national insurance and employer pension contributions.

By September, employers will be asked to start pay 10% of the wages, while the Treausry will 70%.

In October, taxpayers will pay 60%, employers 20%.

The scheme will then close.

The Chancellor also announced an extension of the Self-Employment Income Support Scheme, with those eligible able to claim a second and final grant capped at £6,570.

There have so far been 2.3 million claims to the self-employment scheme worth £6.8 billion.

The grant will be worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits.

Speaking at the daily Downing Street briefing, Sunak said: "As we reopen the economy, there is broad consensus across the political and economic spectrum, the furlough scheme cannot continue indefinitely."

He added: "Our economic response to coronavirus was designed to keep people in work, protect people's incomes and support businesses, all to give us the best chance of recovering quickly as the economy reopens.

"These measures have been on a scale unmatched by any government in recent history.

"I do want to acknowledge that we haven't been able to support everyone in the exact way they would want.

"I understand some people have felt frustrated but you were not and have not been forgotten."

Sunak said that a new collective effort to reopen the country has begun.

He said: "Now, our thoughts, our energies, our resources must turn to looking forward to planning for the recovery and we will need the dynamism of our whole economy as we fight our way back to prosperity.

"Not everything will look the same as before. It won't be the case that we can simply put the key in the lock, open the door and step into the world as it was in January.

"We will develop new measures to grow the economy, to back business, to boost skills and to help people thrive in the new post-Covid world.

"Today, a new national collective effort begins to reopen our country and kick-start our economy."

The Chancellor also outlined more tweaks to the furlough scheme. Perhaps the most significant will be giving employers the flexibility to bring furloughed employees back part time. 

Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them - and will be responsible for paying their wages while in work.

The SNP's Shadow Chancellor, Alison Thewliss said she had concerns about the changes to the scheme. She said it risked "pushing businesses to the brink, forcing self-employed people further into hardship, and could cost countless jobs across the UK.”

Thewliss added: “Workers and employers must not be penalised due to the pandemic, and moves to reduce financial assistance to businesses could end up sending unemployment soaring as they are forced to make mass redundancies or take on unmanageable debt.”

The SNP MP also called  on the Chancellor to "ensure that the devolved nations continue to have access to the furlough scheme for as long as is required to protect jobs and the economy, as well as clarifying what his plans on the furlough scheme will mean for sectors like tourism and hospitality, who were first out and will be last back."

Dr Liz Cameron, Chief Executive of the Scottish Chambers of Commerce said the scheme had been "a lifeline for the majority of Scottish businesses" and had prevented "a mass tsunami of people losing their jobs." 

But she warned that the new tapered approach did not align with the Scottish Government’s route map out of lockdown. 

"This misalignment will affect crucial areas of the economy such as tourism which are forced to close for longer, she warned." 

“Before tapering hits, we need to ensure all sectors of our economy are able to generate trade so they are able to pay employees. Currently there is still a lack of clarity for businesses in Scotland over when they can re-open. We urge the chancellor to adopt measures to ensure that businesses facing ruin as the furlough scheme tapers aren’t forced to fall at the last hurdle.’’