Sunak’s package to stave off jobs wipe- out
■ Workers’ ‘ viable’ roles given support ■ ‘ But I can’t promise everyone their old job back’
CHANCELLOR RISHI Sunak yesterday warned businesses they need to take more control of their destiny after coronavirus as he introduced a vital package of measures to help prevent mass unemployment.
Mr Sunak told MPs it was everybody’s responsibility to defeat Covid- 19 as “the cost is paid by all” and he could not promise everyone could remain in their chosen industries.
However, he was warned that long- term solutions were needed and that the new support was “significantly less generous” and would translate into “sharply rising unemployment” as jobs that relied on state funding would cease to exist.
Speaking in the House of Commons, Mr Sunak said: “Today’s measures mark an important evolution in our approach.
“Our lives can no longer be put on hold. Since May, we have taken steps to liberate our economy and society.
“We did these things because life means more than simply existing. We find meaning and hope through our friends and family, through our work and our community.
“People were not wrong for wanting that meaning, for striking towards normality and nor was the Government wrong to want this for them.”
But he added: “The truth is the responsibility for defeating coronavirus cannot be held by the Government alone. It is a collective responsibility shared by all because the cost is paid by all.”
The new measures include a job- support scheme aimed at protecting “viable” roles rather than all posts, which have been kept going as a result of state support under the furlough programme.
The Government will top up the wages of people working at least a third of their normal hours, with companies that did not take part in the furlough scheme allowed to apply.
But the director of the Institute for Fiscal Studies think tank, Paul Johnson, said: “Mr Sunak is trying to plot a difficult path between supporting viable jobs while not keeping people in jobs that will not be there once we emerge from the crisis.
“With employers now having to pay at least 55 per cent of the normal wages of their employees, it is clear many jobs will be lost over the coming months.”
Mr Sunak also extended the self- employment income- support scheme and suggested a similar grant would 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, have been extended, with new plans due in January, and firms will have up to 10 years to pay off the debt.
And the struggling hospitality and tourism sector was given a cut in VAT from 20 per cent to five per cent for food, non- alcoholic drinks and accommodation extended beyond the original January 12 deadline.
City analysts at Capital Economics put the cost of the announcements at around £ 5bn, while the Chancellor said it would help to “support over 150,000 businesses and protect 2.4m jobs”.
Although the measures were broadly welcomed, Shadow Chancellor Anneliese Dodds said the delay in introducing the support scheme had impacted on the confidence of businesses. She said:
“I’ve called for the introduction of a system of targeted wage support 40 times.
“That call has been rebuffed by this Government 20 times. It’s a relief this Government have Uturned now.
“But we must be open and honest. That delay in introducing this new scheme will have impacted on businesses’ confidence.”
But Mr Sunak said he could not save every job and he could not promise “everyone can go back to the job they used to have”.
At a Downing Street press conference, he said: “This is now something we know is going to be a fact of our lives for a while to come and that means the economy is going to change and adapt.”
Responsibility for defeating coronavirus cannot be the Government’s alone. Chancellor Rishi Sunak in the Commons yesterday.
■ A job support scheme ( JSS) is at the heart of Chancellor Rishi Sunak’s new package of Covid- 19 support measures, offering a fresh financial lifeline to workers and businesses as they prepare for a tough winter ahead.
■ When will the scheme be introduced and how long will it last?: It will launch on November 1 and run for six months.
■ Who is it for?: The scheme is aimed at protecting viable jobs in businesses which are currently facing lower demand than normal. The aim is to keep people in the workforce, even if they cannot work their usual hours.
■ How will the scheme work?: The state will contribute towards the wages of employees who are working fewer hours than normal. Employers will continue to pay staff wages for the hours they work. But for the hours not worked, the Government and the employer will each pay one third of their equivalent salary. It means that employees who can work only on shorter hours will still be paid two- thirds of the hours for the time they cannot work. Employees must be working at least a third of their usual hours and will receive at least 77 per cent of their normal pay. After three months, the Government will consider whether to increase the minimum hours threshold. The Government contribution will be capped at £ 697.92 per month. Employers will be reimbursed in arrears for the Government contribution.
■ Who qualifies to take part?: Employees must be on an employer’s PAYE payroll on or before September 23, 2020. The Government has emphasised the scheme will support only jobs which are viable. The employee must not be on a redundancy notice. Employees can cycle on and off the scheme and do not have to work the same pattern each month. Businesses across the UK can potentially take part, even if they have not previously used the furlough scheme. All small and medium- sized enterprises ( SMEs) will be eligible. Large businesses will need to demonstrate they have been adversely affected by Covid- 19. The Government expects that large employers will not be making capital distributions such as dividends while using the scheme.
■ How much will the scheme cost?: It will depend on take- up, but could cost about £ 300m a month for each million employees who are in the scheme.
■ What has the reaction been?: Tom Selby, analyst at AJ Bell, said of the JSS scheme: “While this might be less generous than the furlough scheme, it at least gives some support to employees and valuable help to businesses hit hardest by lockdown measures.” Mubin Haq, of the Standard Life Foundation, welcomed the measures, but said many people would lack support, adding: “We strongly urge the Chancellor to look again at the protections and ensure people do not fall through the cracks.” Helen Barnard, director of the York- based Joseph Rowntree Foundation, said that where jobs were truly not viable a “right to retrain” was needed, “so that whole areas and industries are not cut adrift amid a gathering storm”.