State to pay wages as PM orders national shutdown
Government will pick up the bill for anyone forced out of work by coronavirus Pubs, restaurants, theatres, cinemas and gyms ordered to close immediately Keeping people apart will save thousands of lives, says Johnson
BORIS JOHNSON promised to underwrite the entire nation’s wage bill as he ordered a total shutdown of pubs, restaurants and leisure facilities to save “thousands” of lives.
Anyone who cannot work because of the pandemic will have 80 per cent of their salary paid by the Government, capped at £2,500 per month, under an unlimited rescue package.
Rishi Sunak, the Chancellor, said the country had reached “a generation-defining moment” as he told businesses he would pick up the bill for anyone “furloughed” by the crisis, to remove the need for companies to lay people off.
The Chancellor said it was an openended commitment and admitted he had no idea how much it would cost.
The move was vital to protect jobs after the Prime Minister closed all pubs, clubs, bars, restaurants, cinemas, theatres, gyms and leisure centres with immediate effect.
He said the “sacrifice” – unheard of even in wartime – was necessary because “we need to keep people apart” after his pleas for people to avoid social gatherings fell on deaf ears. The closures will last indefinitely, but will be reviewed monthly. Shops will be allowed to remain open for now. Mr Sunak said getting through the crisis was “on all of us” as he also unveiled fresh measures to help the unemployed, the self-employed and additional help for employers.
The bailout for workers is on top of the £350 billion package for businesses announced earlier this week.
Another 40 people who tested positive for Covid-19 have died, bringing the total to 177, with 3,983 confirmed cases.
In the NHS, the scale of the crisis ahead was becoming clear as a hospital in north London became the country’s first to declare a critical incident after being swamped by coronavirus patients.
It raised fresh questions about the NHS’S ability to cope amid a shortage of intensive care beds and equipment.
Mr Johnson, meanwhile, was unable to deny that doctors could be forced to make choices over who to save if extra ventilators did not arrive fast enough. In other developments:
♦ Pupils will be given A-level and GCSE grades based on teacher assessments, with the option of sitting exams next summer if they are dissatisfied;
♦ Scientific advice suggested social distancing measures might have to be in place for up to a year;
♦ The Archbishop of Canterbury urged shoppers to “please, please stop” hoarding as panic-buying continued;
♦ Italy hit a new record of 627 deaths in a day as its total toll surpassed 4,000.
Announcing the salary guarantees, Mr Sunak said: “I have a responsibility to make sure that we protect, as far as possible, people’s jobs and incomes.
“Today I can announce that for the first time in our history, the Government is going to step in and help pay people’s wages.”
Announcing a coronavirus job reten- tion scheme, he said “any employer in the country, small or large, charitable or non-profit” will be eligible to contact HMRC for a grant to cover 80 per cent of the salaries of retained workers furloughed and kept on payroll rather than being laid off.
Backdated to March 1, it will be capped at £2,500 per month per worker and last at least three months.
Appealing to bosses, Mr Sunak said: “I know it’s incredibly difficult out there ... the Government is doing its best to stand behind you and I’m asking you to do your best to stand behind our workers.”
Announcing the leisure and hospitality industry shutdown, Mr Johnson said: “We’re taking away the ancient and inalienable right” to go to the pub, but “these are places where people come together, and ... the sad thing is that today for now, at least physically, we need to keep people apart.” He said that by acting now “we will be able to save literally thousands of lives, of people of all ages; people who don’t deserve to die now”.
Pubs, bars and restaurants will be able to provide take-out services, and will be eligible for government loans or grants to make up for lost business.
Sadiq Khan, the Mayor of London, also warned: “Do not use public transport unless genuinely essential. If you ignore this, people will die as a result.”
In addition to wage subsidies, Mr Sunak increased the Universal Credit standard allowance for the next 12 months by £1,000 a year, and increased the working tax credit basic element by the same sum, benefiting, he said, more than four million households.
There was also more help for businesses, as the Chancellor said the next quarter of VAT payments would be deferred until the end of June in a cash injection of £30billion.
The Chancellor also announced selfemployed workers could defer payments for their self-assessment tax return until January 2021, allowing them more time to pay their bill.
THE Chancellor has unveiled the biggest direct state intervention in the economy since the Second World War.
Rishi Sunak set out a multi-billion pound rescue package to save workers from losing their jobs, as swathes of the economy were ordered to shut down.
The Government will subsidise 80 per cent of wages for people temporarily out of work as a result of the crisis who would otherwise have been made redundant. Mr Sunak said the measure was “unprecedented in the history of the British state”.
In addition, as part of his “Plan for People’s Jobs and Incomes”, the Chancellor announced £7billion of support through the welfare system through tax cuts and benefits boosts.
Boris Johnson said the emergency measures – which come in addition to a £350 billion stimulus for businesses announced on Tuesday – were an “exceptional package of support” for workers as he called on businesses to “stand by” their employees.
Paying wages
Mr Sunak said: “For the first time in our history, the British Government is go- ing to step in and help pay people’s wages.” Government grants will cover 80 per cent of the salary of workers unable to work during the crisis but who are retained by their employers.
The grants would be up to a total of £2,500 a month per worker, with employers topping up salaries. Mr Sunak said he aimed to cover “as broad a range” of businesses as possible.
Announcing the measures, he told workers who were worried about losing their jobs and being unable to pay their bills: “You will not face this alone.”
The grants will be run through a “coronavirus job retention scheme”, which will be open to any employer in the country.
The Chancellor said HM Revenue and Customs would work “night and day” to set up the scheme as soon as possible and that he expected the first grants to be paid “within weeks.” It will cover the cost of wages, backdated to March 1, and will be open “before the end of April” for at least three months.
Mr Sunak said: “There’s no limit on the funding available for the scheme, we will pay to support as many jobs as needed.”
Last night the cost of helping a million workers over three months through the scheme was estimated at £4.5 billion, and £9 billion if the scheme ran on for six months, according to the Resolution Foundation, the economic think tank.
Asked how the wage subsidies would be paid for, Mr Sunak said: “Our intention is to finance the package through the Government’s normal debt management operations”, by boosting borrowing.
Frances O’grady, the general secretary of the Trades Union Congress,
described the measures as “a breakthrough.” She said of the Chancellor: “We’re glad he’s listened to unions and taken vital steps to support working families. Employers can now be confident that they will be able to pay their wage bills. They must urgently reassure staff that their jobs are safe.”
VAT
No business will have to pay any VAT from now until mid-june, Mr Sunak announced. They will then have until the end of the financial year to settle those bills.
The Chancellor said this measure would cost the Treasury more than £30 billion, the equivalent of 1.5 per cent of GDP.
Dr Adam Marshall, director general of the British Chamber of Commerce, said: “The Chancellor has given businesses desperately-needed breathing room at this critical moment.
“The deferral of VAT payments keeps money in the pockets of businesses so that they can pay their people and suppliers, and the commitment to cover the wages of those unable to work will allow firms to retain jobs if they are forced to reduce their operations.
Universal Credit
The Chancellor has increased the Universal Credit standard allowance for the next 12 months by £1,000 a year.
The “standard allowance” – which has been £323.22 a month for single people and £507.37 a month for couples – will see the increase put in place for the next 12 months. Mr Sunak announced the benefits rises after telling the nation: “I cannot promise you that no one will face hardship,” adding, “Together these measures will benefit over four million of our most vulnerable households.” In addition, the working tax credit basic element would increase by £1,000. Mr Sunak said the measures would benefit four million households.
They were welcomed by Torsten Bell, chief executive at the Resolution Foundation, a think tank that aims to champion low and middle income families. He said the wage subsidies would “help stem the rise in unemployment, although it will not prevent it.”
Self-employed
The self-employed will be able to access Universal Credit at an equivalent rate to the Statutory Sick Pay that emprotection ployees qualify for. In addition, Mr Sunak deferred the next self-assessment payments from the summer until January 2021.
Mr Sunak said: “I’m strengthening the safety net for self-employed people too by suspending the minimum income floor for everyone affected by the economic impact of coronavirus.
“That means that self-employed people can now access, in full, Universal Credit at a rate equivalent to statutory sick pay for employees.”
However, last night the Government faced criticism for not going far enough to help the four million self-employed people in Britain.
Mike Clancy, general secretary of the union Prospect, said: “There is still no real protection for freelance, selfemployed and contract workers who seem not to be covered by the income scheme and are being left to struggle through the inadequate benefits system.”
Businesses
The Coronavirus Business Interruption Loan Scheme, which was announced in the Budget, will now be interest-free for 12 months, instead of six months.
The launch of the scheme has also been brought forward to Monday.
The loans, which will be provided by the British Business Bank at “attractive terms”, are designed to support cashstrapped small and medium-size businesses during the crisis.
The Chancellor said that he intended to announce further measures, for larger and medium-size businesses, next week.
Renters
Tenants who rely on housing benefit and universal credit will receive a boost of nearly £1 billion, Mr Sunak said.
The Government announced that the Local Housing Allowance will cover at least 30 per cent of market rents in a renter’s area.
Earlier this week the Government announced that it would bring emergency legislation to ensure that no renter would be forced out of their home through the crisis.
Writing for the telegraph.co.uk website today, Robert Jenrick, the Housing Secretary, said: “The weeks ahead will not be easy,” but went on to tell renters and homeowners: “Nobody needs to worry about losing their home at this difficult time.”