Rishi splashes cash again
‘Winter plan’ to help firms but he warns he cannot save every job
RIShI Sunak will today set out plans for another multi-billion-pound business support scheme – but will warn that the Treasury cannot save every job threatened by the Government’s Covid restrictions.
The Chancellor last night cancelled plans for a full-scale Budget in November, with sources saying it was ‘not the time’ for long-term plans.
Instead he will map out an emergency ‘ Winter economy Plan’ today designed to help firms cope with new Covid restrictions which Boris Johnson has warned will last for six months.
Whitehall sources last night said the Chancellor’s plans would include a new wage subsidy scheme modelled on a German scheme that helps fund salaries at firms where there is only enough work to go back part-time.
Mr Sunak is also expected to extend a number of cheap loan schemes for business. And the Prime Minister hinted yesterday there would be additional help for the self-employed.
Ministers are also looking at a bailout scheme for struggling sports clubs hit by a ban on crowds. But Treasury sources said the Chancellor had rejected calls to extend the £35billion furlough scheme, despite warnings that its closure at the end of next month could result in more than one million redundancies.
‘The Chancellor has shown he has been creative in the past and hopes that people will trust us to continue in that vein,’ a source said. ‘Giving people reassurance and businesses the help they need to get through this is uppermost in his mind.’ Mr Sunak played a pivotal role in helping persuade Mr Johnson not to move to an immediate second lockdown this week.
But the decision to tighten Covid restrictions on the hospitality sector and order millions of office staff to work from home until spring has put him under huge pressure to bring forward more support.
Today he is expected to warn that the Treasury does not have a bottomless pit of money to prop up the economy indefinitely – and cannot save every job.
Allies said he would be ‘very honest with people’ about the ‘difficult trade-offs’ the Government faces as it tries to deal with the twin challenges of surging Covid cases and a battered economy.
‘It is not about health versus the economy, but about the balance between keeping people in jobs and finding them new ones,’ the source said.
The Treasury was tight-lipped about the Chancellor’s plans last night. But it is understood he will press ahead with a version of Germany’s ‘kurzarbeit’ scheme, which ensures workers who have had their hours cut by struggling firms receive a minimum of 60 per cent of their lost pay.
A similar scheme proposed by the Confederation of British Industry would see subsidies for firms that can offer staff at last 50 per cent of their normal hours, with the cost for non-working hours
shared equally by the company, the Treasury and the employee. The final scheme is likely to be significantly cheaper than furlough, which has paid 80 per cent of the wages of staff unable to work and helped protect 9.6million jobs. But it will fall short of demands from Labour and the unions for the furlough scheme to continue indefinitely. In the Commons yesterday, Mr Johnson was repeatedly urged to extend the furlough scheme in the wake of his decision to tighten Covid restrictions for at least six months. Labour leader Sir Keir Starmer urged him to ‘stop and rethink, support the businesses affected, not to withdraw furlough’. Mr Johnson said the furlough scheme had ‘already been extended’ once, addthe ing: ‘I do not think that it would be sensible simply to extend the current existing furlough scheme in its present form beyond the end of October.
‘But we will do everything we can to support businesses and to support those in jobs and, indeed, the self-employed.’
Mr Johnson said the Government had already paid out £160billion to prop up the economy, with business support more generous than in most other countries.
Entrepreneur and former Pizza Express boss Luke Johnson told the BBC’s Newsnight programme that closure of the furlough scheme at a time when the economy was still operating under tight restrictions would lead to mass redundancies next month. ‘I would estimate of three million [still on the furlough scheme], at least a million... will be made redundant,’ he said.
The decision to cancel the Budget is a blow to the Treasury’s hopes of getting the public finances back on a more even keel.
Mr Sunak had been considering tax rises to help offset a budget deficit expected to top £300billion this year. But decisions on tax will now have to be delayed until next year.
The cancellation of the Budget could also prove a blow to the aviation industry, which had been hoping for a cut in Air Passenger Duty.
A Government source last night told the Mail that ministers were also looking at a rescue package for threatened football and rugby clubs.
‘We cannot have a situation where local football clubs are going to the wall,’ the source said. ‘They and other similar sports clubs are critical parts of their communities.’
‘Honest about difficult trade-offs’