UK News Sunak sets out multibillion-pound rescue package but accepts jobs will go
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A multibillion-pound package of support for the economy may not be enough to prevent rising unemployment and businesses going to the wall, Chancellor Rishi Sunak admitted.
The resurgence of coronavirus poses a threat to the UK’s “fragile” economic recovery, the Chancellor said as he confirmed plans for the state to top up the wages of workers forced to cut their hours due to the pandemic.
The Job Support Scheme was aimed at protecting “viable” roles once the furlough scheme comes to an end, with Mr Sunak arguing it would be “fundamentally wrong” for people to be kept in jobs that can only exist due to state funding.
Timeline of key events since UK was put into lockdown
Unprecedented restrictions were announced on March 23. – March 23: The UK public is told that they will only be allowed to leave their homes for limited reasons, including food shopping, exercise once per day, medical need and travelling for work when absolutely necessary. © Provided by PA Media Prime Minister Boris Johnson addressing the nation from 10 Downing Street (PA Video) All shops selling non-essential goods are told to close, gatherings of more than two people in public are banned, events including weddings – but excluding funerals – are cancelled.
Other measures included in the package include an extension of the VAT cut for tourism and hospitality and more flexible terms for the repayment of Government-backed loans.
City analysts Capital Economics put the cost of the announcements at around £5 billion.
It comes as another 6,634 lab-confirmed cases of coronavirus were recorded in the UK on Thursday, the highest-single day total since the start of the pandemic.
Experts have previously warned that describing the daily figure as a record could be “misleading” as it is not clear how many people were actually infected during the height of the first wave due to a lack of community testing at the time, but it brings the overall number of cases confirmed to 416,363.
The Job Support Scheme, which will last for six months from November, will see the state and employers top up the wages of staff working at least a third of their normal hours, with companies which did not take part in the furlough scheme also allowed to apply.
Furlough 2.0: Rishi Sunak draws up German-style scheme for businesses
Chancellor is under mounting pressure from business chiefs and politicians to find a new way to avoid mass layoffs when the government's £39billion furlough scheme ends next month. It comes as Boris Johnson yesterday hit reverse on his 'back to work drive' and imposed new restrictions on the Covid-19 hit hospitality industry in a bid to slow Britain's rising infection rates, while avoiding an economically devastating second national lockdown.
Under the scheme, a worker doing a third of their normal hours will still receive 77% of their usual pay, up to a cap – 33% from their firm for the hours worked, a 22% top-up from the employer and a further 22% from the state.
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 limited to £697.92 per month.
By comparison, the furlough scheme which expires on October 31 has cost the Government £39.3 billion – about £6 billion a month.
The scheme will be targeted at small and medium-sized firms with fewer than 250 employees – larger companies will only be eligible if they can show their turnover has been hit as a result of coronavirus.
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.
As furlough winds down, the chancellor is considering a German solution
This isn't widely known but Rishi Sunak's furlough scheme was actually in some ways one of the fruits of Brexit. © Getty Chancellor Rishi Sunak will not want to bring back the full furlough scheme Back before COVID-19, the Treasury had a number of options for policies to impose in the event of a catastrophic no-deal Brexit, one of which was to introduce something similar to a German system - the kurzarbeit.
“I can’t promise that everyone can go back to the job that they used to have,” Mr Sunak said.
The Chancellor 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 until the end of March, at an extra cost of around £800 million.
The Chancellor said it will help to “support over 150,000 businesses and protect 2.4 million jobs”.
Chancellor to reveal emergency job protection plan amid new Covid restrictions
Rishi Sunak, who will address the Commons after cancelling this year’s Budget statement, will unveil measures for sectors hit hard by coronavirus.The Chancellor will address the Commons after cancelling this year’s Budget.
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 – although Downing Street rejected suggestions of a rift at the top of Government.
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”.
The Chancellor said that while in March it was hoped there would be a “temporary period of disruption” to the economy as a result of the virus, it now appeared there would be a “more permanent adjustment”.
“The sources of our economic growth and the kinds of jobs we create will have to adapt to the new normal,” he said.
At a Downing Street press conference, Mr Sunak indicated he would be prepared to fund extra measures if they were required.
“If you’re asking me if I’m ready to do more as the situation evolves, of course I am,” he said.
But he acknowledged there would have to be “difficult” decisions in order to repair the public finances as the economy recovered.
Shadow chancellor Anneliese Dodds said the package of measures “comes too late for many people who have already lost their jobs”.
Sunak sets out coronavirus support for workers and firms
The Chancellor said the resurgence of the disease posed a threat to the ‘fragile economic recovery’.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.
Recover Jobs, Retrain Workers, Rebuild Business: Labour’s 3 steps to a better, more secure future for Britain.
The Chancellor's response today won't recover enough jobs. It was silent on retraining. And it had no plan to rebuild business sustainably.
It’s too little, too late.
— Anneliese Dodds (@AnnelieseDodds)
CBI director-general Dame Carolyn Fairbairn welcomed the “bold steps” from the Treasury and said: “Wage support, tax deferrals and help for the self-employed will reduce the scarring effect of unnecessary job losses as the UK tackles the virus.”
But Julian Bird, chief executive of UK Theatre, said the Chancellor’s announcement did little to help the performing arts sector, where the majority of venues and productions remain closed due to Covid-19.
“Our previously viable and world-beating sector is facing decimation as with no income, organisations cannot bring their staff back to work,” he said.
Video: "Rishi Sunak unveils Job Support Scheme to prevent redundancy in winter months" (Evening Standard)
Borrowing records smashed as Sunak prepares to splash more cash .
The Treasury borrowed the third-highest sum for any month on record in August, according to official figures - as the chancellor prepares to unleash his latest support for the coronavirus-hit economy. © Getty The Treasury has smashed borrowing records during the coronavirus crisis The Office for National Statistics (ONS) reported that public sector net borrowing, excluding the effects of bank bailouts, was estimated to have hit £35.9bn last month - the highest sum ever recorded for an August.