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Rishi Sunak expands furlough replacement scheme Rishi Sunak expands furlough replacement scheme
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Chancellor announces fresh support package for businesses as Covid restrictions biteChancellor announces fresh support package for businesses as Covid restrictions bite
Rishi Sunak has responded to growing pressure over the level of government support for parts of the country facing tough new coronavirus restrictions with a last-minute expansion of the new furlough scheme. Rishi Sunak was forced into unveiling a last-minute multibillion-pound package for business and workers amid fears of mass unemployment and anger over lack of government support.
Moving to appease worried business leaders and backbench northern Tory MPs as more parts of the country are put into higher restriction levels, the chancellor said he would make available billions of pounds in additional aid to protect jobs through a difficult winter. Moving to appease worried hospitality sector leaders and northern Tory MPs as more parts of the country are put under stringent coronavirus measures, the chancellor said he would expand the new furlough scheme to protect jobs through a difficult winter.
In the fourth major economic update in as many months, the chancellor said he would significantly expand the Treasury’s new flagship job support scheme (JSS) to pay a larger share of workers’ wages than initially planned, alongside more money for the self-employed and grants for businesses in areas affected by local lockdowns. Shortly after he announced the plans, health secretary Matt Hancock revealed that Coventry, Stoke-on-Trent and Slough would be moved into tier 2 restrictions at the weekend. Nottingham is braced for the most severe, tier 3 curbs in the coming days.
With just over one week before the launch of the JSS, which replaces the multibillion-pound furlough programme from the start of November, the chancellor said he would reduce the level of employer contribution required to access the support to 5% of a workers’ usual wage, down from a previous level of 33%. Despite business groups and thinktanks having pointed to flaws in the chancellor’s flagship Job Support Scheme (JSS) as soon as it was announced a month ago, Sunak claimed he was responding to the changing epidemiological picture with the fourth major economic update in as many months.
The government will also cut the number of hours an employee must work before a company can benefit, slashing it to 20% from 33%, to enable more firms to utilise the system. “Just as we have throughout this crisis we will listen and respond to people’s concerns as the circumstances evolve,” he told a Downing Street press conference, conceding that business were struggling under the “cumulative weight of all these new restrictions”.
The UK recorded 21,242 new coronavirus cases on Thursday and there were 189 further deaths from the disease. However, Public Health England data suggests that cases stabilised last week for the first time in seven weeks though the number of people being admitted to hospital increased.
The chancellor said he would significantly expand the JSS to pay a larger share of workers’ wages than initially planned, alongside more money for the self-employed and grants for businesses in areas affected by local lockdowns.
With just over one week before the launch of the JSS, which will replace the furlough programme from the start of November, the chancellor said he would reduce the level of employer contribution required to access the support to 5% of a worker’s usual wage, down from a previous level of 33%.
The government will also cut the number of hours an employee must work before a company can benefit, slashing it to one day a day (20%) from 33%, to let more firms use the system.
Offering a broader funding package in response to anger from Conservative MPs in northern seats where tougher lockdown restrictions have been used for several months already, Sunak said grants worth up to £2,100 per month would be offered to businesses, with the cheques available to be backdated until the start of August.Offering a broader funding package in response to anger from Conservative MPs in northern seats where tougher lockdown restrictions have been used for several months already, Sunak said grants worth up to £2,100 per month would be offered to businesses, with the cheques available to be backdated until the start of August.
Designed primarily for firms in the hospitality, accommodation and leisure sector struggling under the weight of tighter controls, the Treasury said the value of the grants – when added to support for local authorities moving into tier 3 restrictions – would be worth more than £1bn. It said the funding could help 150,000 firms in England, including hotels, restaurants and B&Bs that aren’t legally required to close. Designed primarily for firms in the hospitality, accommodation and leisure sector, which have been hit hard by restrictions on opening and a ban on households mixing inside in some areas, the Treasury said the grants – when added to support for local authorities moving into tier 3 restrictions – would be worth more than £1bn.
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, in an attempt to patch up relations with industry as growing numbers of firms come under pressure. It said the funding could help 150,000 firms in England, including hotels, restaurants and B&Bs that are not legally required to close but are suffering regardless.
Kate Nicholls, chief executive of the UKHospitality lobby group, which represents restaurants, pubs, bars and hotels, said: “This is a hugely generous package of support and very welcome news just when we needed it.” Sunak’s statement came days after talks with the mayor of Greater Manchester, Andy Burnham, ended acrimoniously over the region entering the highest tier 3 level of Covid restrictions, with the two sides just £5m apart over a deal.
“The changes to the Job Support Scheme will help to safeguard hundreds of thousands of jobs and the grant support will provide a crucial lifeline for businesses struggling with low footfall and ongoing costs. It is excellent that the grant has been backdated to when the restrictions began to bite.” Burnham said many of Sunak’s latest initiatives were exactly what he asked the government for when talks broke down earlier this week, telling MPs he had been left “open-mouthed” by the news.
Speaking alongside Sunak in Downing Street, the prime minister insisted the new support scheme was separate from the fraught talks over funding for regions facing tier 3 curbs.
“The negotiation between regional leaders, between metro mayors, was all about fairness. It was about making sure everybody got the same package. What we’re trying to do now is to address a national issue,” he said.
He presented the government’s approach of using regional restrictions to clamp down on the virus as a “balanced approach” between advocates of a “laissez faire” approach and those who want to “lock the whole place down from John O’Groats to Lands End, turn the lights out, shut up shop”.
The changes came 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, in an attempt to patch up relations with industry as growing numbers of firms come under pressure.
The Treasury insisted the meeting did not flout lockdown rules because the branch was “not a functioning restaurant at the time”.
Kate Nicholls, chief executive of the UKHospitality lobby group, which represents restaurants, pubs, bars and hotels, said: “This is a hugely generous package of support and very welcome news just when we needed it.
“The changes to the JSS will help to safeguard hundreds of thousands of jobs and the grant support will provide a crucial lifeline for businesses struggling with low footfall and ongoing costs. It is excellent that the grant has been backdated to when the restrictions began to bite.”
However, critics attacked the government for waiting until the 11th hour to ramp up the level of support for businesses and workers, warning that jobs will have been lost and that not enough help was available for people who had already fallen out of work.However, critics attacked the government for waiting until the 11th hour to ramp up the level of support for businesses and workers, warning that jobs will have been lost and that not enough help was available for people who had already fallen out of work.
It also comes days after the government blew up talks with the mayor of Greater Manchester, Andy Burnham, over the region entering the highest tier 3 level of Covid restrictions with the two sides just £5m apart over a deal. 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-level restrictions “without adequate support”, she lambasted Downing Street’s approach.
Burnham said many of Sunak’s latest initiatives were exactly what he asked the government for when talks broke down earlier this week.
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.“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?”“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.”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.”
The expansion of the JSS comes just under a month since the chancellor first announced the plan to subsidise workers’ wages, mimicking a similar system of support for short-time working used in Germany. Under the original scheme envisaged by the chancellor, the state would have paid a third of a workers’ wages, and their employer another third.The expansion of the JSS comes just under a month since the chancellor first announced the plan to subsidise workers’ wages, mimicking a similar system of support for short-time working used in Germany. Under the original scheme envisaged by the chancellor, the state would have paid a third of a workers’ wages, and their employer another third.
However, experts warned from the moment the JSS was first announced that it would do little to prevent a tsunami of redundancies over the winter because the level of employer contribution had been set too high.However, experts warned from the moment the JSS was first announced that it would do little to prevent a tsunami of redundancies over the winter because the level of employer contribution had been set too high.
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.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 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.