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 jobs 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.
They 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.
He also extended the self-employment income support scheme and 15% VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.
Sunak delivered his plans in the House of Commons, but Prime Minsiter Boris Johnson was not there to support him as he was visiting police recruits in Northamptonshire.
Downing Street denied speculation about a rift between at the top of Government, insisting there was “absolutely not” a problem between Johnson and Sunak.
The Chancellor told MPs: “The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery.”
And he acknowledged “we can’t save every business” and “we can’t save every job”.
Here are the changes at a glance:
– The Jobs Support Scheme (JSS), a form of wage subsidy for “viable” jobs, will replace the furlough scheme, which will be wound down next month.
– The JSS will allow staff to be paid by their employer for working at least a third of their usual hours, with the Government topping up the remaining two-thirds of their salary that would have otherwise been lost due to working reduced hours.
– All small and medium-sized businesses will be eligible for the wage support concept, which starts in November and runs for six months, but larger businesses will have to prove their profits have been hit by the pandemic.
– The current self-employed grant will be renewed on similar terms to the new Jobs Support Scheme, the Chancellor said.
– The temporary reduction of VAT rates from 20% to 5% for the hospitality and tourism sectors will be extended for a further two months, with a new deadline of March 31 2021.
– Business “bounce-back loans” will have a “pay-as-you-grow” element added, giving loanees 10 years rather than six years to repay the money, a move that will slash monthly repayments by almost half, according to the Chancellor.
– Those struggling to repay their bounce-back loans will be able to choose to make interest-only payments and “anyone in real trouble” will be permitted to suspend repayments all together for up to six months, said Mr Sunak.
– The deadline for taking out a coronavirus business interruption loan will be extended until November 30, with Mr Sunak also increasing the Government guarantee on them for up to 10 years.