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Rishi Sunak prepares to unveil Covid wage rescue package Rishi Sunak expands furlough replacement scheme
(about 1 hour later)
Chancellor to announce more support for businesses as coronavirus restrictions bite Chancellor announces fresh support package for businesses as Covid restrictions bite
Rishi Sunak is expected to announce a significant expansion of the furlough replacement scheme with the government paying a larger share of workers’ wages to protect companies struggling with Covid-19 restrictions. Rishi Sunak has announced an expansion of the furlough replacement scheme with the government paying a larger share of workers’ wages to protect companies struggling with Covid-19 restrictions.
Sources in business and industry said the chancellor would cut the level of employer contribution companies must make to receive wage subsidies for their workers on the job support scheme (JSS). As pressure mounts on the government over its handling of the pandemic, the chancellor said he would launch a new grant scheme for firms facing tier 2 controls and cut the level of employer contributions companies must make to receive wage subsidies for their workers on the job support scheme (JSS).
In an intervention just over one week before the launch of the JSS, which replaces the multibillion-pound furlough programme from the start of November, the expansion in government funding comes as pressure mounts on the chancellor to act amid the second wave in Covid-19. In an intervention just over one week before the launch of the JSS, which replaces the multibillion-pound furlough programme from the start of November, Sunak reduced the level of employer contribution to 5% of a workers’ usual wage, down from a previous level of 33%.
In a bid to assuage growing unrest over the government’s handling of the pandemic, the chancellor held a “hybrid” briefing with business leaders and trade unions in a London restaurant, with executives also attending online, early on Thursday before a set-piece Commons economic update. The government will also cut the number of hours an employee must work before a company can receive support, reducing it to 20% from 33%, so that staff working just one day a week would be eligible.
Sources at the meeting indicated the expansion in the JSS was likely to be applied nationwide, regardless of whether a business is subject to a higher tier of coronavirus restrictions. A reduction in the number of hours an employee must work could also be included. He said that meant if someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer only £44. “These changes mean more employers can access the scheme, and more jobs will protected,” he told MPs in a set-piece economic update.
Under the previous plans for the JSS, announced just under a month ago, an employee must work at least a third of their normal hours to receive state support. Their employer would pay normal wages for those hours. Under the previous plans for the JSS, announced just under a month ago, an employee had to work at least a third of their normal hours. The state would then pay a third of their wages, and their employer another third.
Of the remaining two-thirds of each worker’s usual pay, the employer will pay 33% and the government will pay 33%, meaning that the worker will receive 77% of their usual monthly wage in total. The government will be paying 22%, capped at a maximum £697.72 a month. The employer will pay 55%. However, experts had warned that the level of employer contribution was too high and would do little to prevent a tsunami of redundancies over the winter as Covid infections rise and tougher restrictions are imposed.
However, the expansion in the scheme is expected to dramatically reduce the level of employer contribution, ramping up support from the Treasury. The chancellor is also expected to announce a package of equivalent support for self-employed workers, as well a fresh expansion in taxpayer-funded grants for firms struggling to cope with restrictions. The changes come after Sunak met representatives of the hospitality industry, business groups and the TUC on Thursday morning at a Franco Manca pizza restaurant at Waterloo in London, to try to assuage growing unrest over the government’s handling of the pandemic.
The Treasury declined to comment. Alongside the expansion of the JSS, the chancellor increased the amount of profits covered by its new self-employed grant schemes, from 20% to 40%, meaning the maximum grant will increase from £1,875 to £3,750.
The Treasury said this was a potential further £3.1bn of support to the self-employed people through November to January, with a further grant to follow covering February to April.
The chancellor also announced additional funding to support cash grants for struggling firms of up to £2,100 per month, primarily for businesses in the hospitality, accommodation and leisure sector.
Under pressure from Conservative MPs representing northern areas that have been subject to restrictions for longer than other parts of the country, Sunak said the grants would be available retrospectively for firms in areas that have been under tighter controls.
The Treasury said the value of the grants, when added to support for local authorities moving into tier 3, would be worth more than £1bn and could benefit 150,000 firms in England, including hotels, restaurants and B&Bs that aren’t legally required to close.
Sunak said: “I’ve always said that we must be ready to adapt our financial support as the situation evolves, and that is what we are doing today. These changes mean that our support will reach many more people and protect many more jobs.
“I know that the introduction of further restrictions has left many people worried for themselves, their families and communities. I hope the government’s stepped-up support can be part of the country pulling together in the coming months.”
The shadow chancellor, Anneliese Dodds, accused the government of presiding over a “patchwork of poor ideas rushed out at the last minute” in recent months. Highlighting the plight of parts of the country that have had to endure tier 2 restrictions “without adequate support”, she lambasted Downing Street’s approach.
“How many jobs have been lost, Mr Speaker, because of that inaction? Over a million have already gone,” she told MPs, adding: “Last quarter we saw a record rise in redundancies. The chancellor could have done much more if he had acted sooner.
“And now we see yet another last-minute move. Let me ask the chancellor, what’s changed? What’s changed that means this is the right thing to do now but it wasn’t when parts of the north and Midlands entered tier 2 many weeks ago?”
She suggested the government was only changing course now tougher restrictions were hitting the capital. She said: “The chancellor has only caught up and listened to the anxiety of workers and businesses when it looks like these restrictions will be affecting London and the West Midlands.
“Will he apologise to those who have already lost their jobs, seen that their businesses slip through their fingers in those areas that have not had that support until now?”
She added: “This is becoming like a long-running television show. The winter economy plan, series three. But, you know, the twist is, it didn’t last the winter, it didn’t do enough to help the economy and it wasn’t a plan. We’ve got to get ahead of this crisis, instead of always running to keep up. That’s why Labour’s called for a national circuit breaker to give the chance to reset, to fix the broken test, trace and isolate system.”