New furlough scheme to give workers two thirds of wages if their business is forced to shut
WORKERS in lockdown areas where businesses are forced to shut will get two thirds of their wages paid for in a new furlough-style scheme, it was announced today.
Chancellor Rishi Sunak set out measures from his new economic package, offering a new furlough programme in all but name for firms that are ordered to close.
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It’s a sign that in the coming days the Government will force businesses in England to shut – like pubs have been made to in central Scotland.
Ministers are expected to outline a three-tier local lockdown system on Monday, which could see hospitality venues in coronavirus hotspots being temporarily shut.
The Treasury admitted today the new rescue package for local areas would run into the billions of pounds over the next six months – as it prepares to continue propping up firms to try and save thousands of jobs this winter.
The new scheme – which will kick in when the current Job Retention Scheme closes at the end of the month – will be eligible to firms who have been on the payroll on 23 December and are told to close by the Government.
This includes businesses that are required to provide only delivery and collection services from their premises, or food and drink outdoors from their premises too.
Workers will be able to get their wages partially paid for up to six months, and it will be reviewed in January.
On the new programme, people will have to be off work for at least a week in order quality.
The Government will pay two thirds of wages up to £2,100 a month – but it’s unclear whether employers will top them up like they do under the current programme.
Critics said it was essentially a u-turn back to the furlough scheme but only for some sectors – rather than a move to wean businesses off state support after months of extra help.
It came as:
- Shadow Chancellor Annelise Dodds blasted the Chancellor for waiting until “the last possible minute” to lay out more help
- Ministers admitted coronavirus was “out of control” again and measures were needed to bring numbers down
- 13,864 new cases of the virus were recorded today – and 87 deaths.
- The UK economy grew by 2.1% in August thanks to Eat Out to Help Out but the recovery was less than half predicted
- Nottingham has the highest coronavirus rate in the country with more than 600 cases per 100,000, but still has no local restrictions in place
- Vulnerable Brits face months inside under new plans to bring back shielding
- Coronavirus infections doubled in a week, the latest ONS study showed
- Face masks in offices were being “considered”, a minister said
Businesses will be able to get up to £3,000 a month in help, which is paid in arrears every two weeks, rather than every three at the moment.
And the scheme will open to places that are already still forced to close – like nightclubs which haven’t been allowed to reopen.
It will be a part of the new Jobs Support Scheme where employers can get 22 per cent Government help to pay wages if employees are only working part-time at the moment due to reduced demand.
Mr Sunak said today: “I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves.
“The expansion of the Job Support Scheme will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time.”
It’s likely to cost billions over the next six months, adding more onto Britain’s ballooning coronavirus bill.
A Treasury source said: “Obviously costings will depend on how things develop – across different sectors and areas of the country.
“But under most scenarios we’re looking at hundreds of millions a month.”
Top ten worst hit areas
1) Nottingham 760.6 cases per 100,000 (2532 new cases)
2) Knowsley 657.6 (992)
3) Liverpool 599.9 (2988)
4) Manchester 524.7 (2901)
5) Newcastle upon Tyne 516.1 (1563)
6) Burnley 465.6 (414)
7) Exeter 438.3 (576)
8) Sheffield 426.8 (2496)
9) Sefton 397.2 (1098)
10) Leeds 393.5 (3121)
SAFETY NET FOR WINTER
In a pooled clip to the media he denied that it was just a rebranded furlough scheme, which he said he wouldn’t extend, arguing it was “fundamentally wrong” to hold people in jobs that weren’t viable.
He said: “This is not a universal approach, this is an expansion of the Jobs Support Scheme specifically for those people who are in businesses that will be formally or legally asked to close so in that sense it’s very different.
“I hope this provides reassurance and a safety net for people and businesses in advance of what may be a difficult winter.”
But the Resolution Foundation’s Torsten Bell said: “With infections rising sharply, the Chancellor is right to have brought back a targeted version of the furlough scheme to pave the way for further lockdown restrictions, both local and national, in the weeks to come.
“It will particularly benefit the hospitality and leisure sectors that are most likely to be required to close.”
He said it had been clear for some time now that a local furlough scheme was needed, but the delay will come at “a high price in jobs lost”.
The Chancellor suggested that the lockdown measures were not set in stone yet, saying that local Government would be in conversations with ministers this weekend.
“That’s what is happening this afternoon and over the weekend,” he told Sky News. “So those conversations can happen and collectively we can decide on the appropriate response.”
Today’s announcement is the latest of several statements the Chancellor has had to make to support jobs and workers since the pandemic began.
He’s pumped in £210billion to the furlough scheme already in the seven months it’s been running.
MPs reacting to the announcement said the help was welcome, but the numbers didn’t add up.
A joint statement by mayors of Greater Manchester, North Tyne, Sheffield City, Liverpool City said: “What has been announced by the Chancellor today is a start but, on first look, it would not appear to have gone far enough to prevent genuine hardship, job losses and business failure this winter.”
Labour’s Lucy Powell added@ “Welcome that Government has accepted principle that businesses forced to close need support, as we’ve been calling for.
“But that principle needs making a reality by the numbers adding up. They still don’t unfortunately. And many businesses still closed from 1st time with nothing.”
GMB Union said the help wasn’t enough.
GMB Acting General Secretary John Phillips said: “Rishi Sunak has today served up a dish of support that is too unsubstantial, leaving many workers struggling to put food on the table.
“In workplaces now forced to close, the imposition of an effective 33% pay cut will leave many without enough to live on and pay the bills, given how low wages were in the first place.”
And pub owners were unimpressed at having to close in Scotland this evening.
Karina Bowlby, who owns The Fat Pheasant at Newton, near Edinburgh, was on Friday preparing to close her pub until at least October 25 as new restrictions come into force at 6pm.
She said earlier: “I just don’t feel there’s justification for shutting down the pubs.
“The stats don’t warrant it, as regards to the amount of infections from a premises, and I’m just really, really frustrated.
“I feel we’ve been made a bit of a scapegoat really.”
But Mike Cherry OBE, Federation of Small Businesses National Chairman, said it was a “game changer” for small firms.
He said: “Thousands of small firms will be pleased to see the Chancellor embracing two of FSB’s suggestions to the Treasury for greater, targeted support for small businesses whose premises are enforceably closed by government lockdown.”
And Dame Carolyn Fairbairn, Director General at the CBI added: “The Chancellor’s more generous job support for those under strict restrictions should cushion the blow for the most affected and keep more people in work.”
What is the new expansion of the Jobs Support Scheme?
- Two thirds of wages for businesses ordered to shut
- Will pay up to £2,100 a month rather than the previous £2,500 a month
- Have to be on payroll by September 23
- If already on the Job Retention Scheme, you can carry it over from the start of next month
- Employers will not be required to contribute towards wages and only asked to cover NICS and pension contributions
- Grants will be administered by Local Authorities, and eligible businesses will probably need to provide their details to their Local Authority to access this support
UKHospitality Chief Executive Kate Nicholls said: “Paying two-thirds of wages for employees in lockdown is a welcome step…
“Support for nightclubs and other businesses left in limbo, still unable to reopen, is very welcome. It will help save jobs in a sector that would be sorely missed it were allowed to die.
“However, worryingly, it does nothing to address the issues faced by sector businesses operating well below capacity due to restrictions and consumers avoiding travel and struggling to keep their workforce employed.
“If the Government is serious about saving jobs, it needs to rethink the mandatory curfew in areas where COVID rates are low.”
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But Tory MPs rallied around to defend the latest help, denying it was a “u-turn” and return the old furlough.
Minister Brandon Lewis said: “Very pleased that the UK Govt is able to extend this support – it will be particularly valuable for people & businesses in Northern Ireland.
“We have always said we do whatever we can to support jobs and livelihoods across all four nations and that is exactly what we are doing.”