SUNAK REVEALS JOB SUPPORT PLANS:
THE resurgence of coronavirus poses a threat to the UK’s “fragile” economic recovery, Rishi Sunak warned, as he confirmed plans for the state to top up the wages of workers forced to cut their hours due to the pandemic.
As part of a package of measures, the Chancellor said the new job support scheme was aimed at protecting “viable” roles rather than all posts which have been kept going as a result of state support under the furlough programme.
Under the terms of the new scheme, the Government will top up the wages of people working at least a third of their normal hours, with companies which did not take part in the furlough scheme allowed to apply.
Staff will be paid for that work as normal, with the state and employers then increasing those wages to cover two-thirds of the pay they have lost by working reduced hours.
It will cost the Treasury an estimated £300 million a month for every million workers who take up the scheme – with Government contributions per worker capped at £697.92 per month.
By comparison, the furlough scheme has cost the Government £39.3 billion – about £6 billion a month.
The Institute for Fiscal Studies (IFS) think tank warned the new Job Support Scheme was “significantly less generous” and will translate into “sharply rising unemployment”, as jobs which relied on state funding will cease to exist.
Business groups and unions welcomed the move, although there were fears that more needed to be done for future job creation and they called for more details.
Employers will see their own contributions towards the wages of furloughed staff rise from 20% of pay to at least 55% from November, and any employing more than 250 staff must prove they have been adversely affected by Covid.
Mr Sunak also extended the self-employment income support scheme and suggested a similar grant will be introduced, although a trade body warned more than a million could miss out on the measures.
Business loans, including the bounce back and Coronavirus Business Interruption Loan Scheme (Cbils) have been extended, with new plans due in January, and firms will have up to 10 years to pay off the debt.
About £15.45 billion has been lent under Cbils and almost 1.3 million companies have borrowed more than £38 billion through bounce back – with the taxpayer footing the vast majority of the bill for any defaults.
The struggling hospitality and tourism sector saw a cut in VAT from 20% to 5% for food, non-alcoholic drinks and accommodation extended beyond the original January 12 deadline.
The Chancellor said it will help to “support over 150,000 businesses and protect 2.4 million jobs”.
Mr Sunak delivered his plans in the House of Commons, but Prime Minister Boris Johnson was not there to support him as he was visiting police recruits in Northamptonshire.
Downing Street denied speculation about a rift at the top of Government, insisting there was “absolutely not” a problem between Mr Johnson and Mr Sunak.
The Chancellor acknowledged “we can’t save every business” and “we can’t save every job”.