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Chancellor Rishi Sunak unveils three extra support measures for businesses


New government Covid scheme to pay up to half of wages


New government Covid scheme to pay up to half of wages

LT24:BBC:SKY::Chancellor Rishi Sunak has vowed to “go further” as he announced three new measures to help workers and businesses get through the winter and a coronavirus second spike.

Speaking in the House of Commons, he said cash grants of up to £2,100 a month will be given to firms in Tier 2 areas – enough for all affected hospitality, accommodation and leisure premises.

They will be retrospective, so any region which has been under enhanced restrictions can backdate their claim to August.For self-employed people, the size of the grant they can access will also be doubled to £3,750 – with the amount of average profits they can claim for rising from 20% to 40%.

And there will be changes to the Job Support Scheme, which is for companies experiencing lower demand due to the COVID-19 outbreak.

Employees will only need to work 20% of their normal hours – instead of the original 33% – to be eligible.

And the government will significantly reduce the amount employers have to contribute – from 33% to 5%.

“The scheme will apply to eligible businesses in all alert levels,” Mr Sunak confirmed.

“So businesses that are not closed but face higher restrictions – in places like Liverpool, Lancashire, South Yorkshire and Greater Manchester as well as the devolved nations – will be able to access greater support.”

Mr Sunak explained he was making the changes because: “It is clear that even businesses that can stay open are facing profound uncertainty.”

He continued: “This is our plan. A plan for jobs, for businesses, for the regions, for the economy, for the country. A plan to support the British people.”

How does the new plan work in detail?

Instead of a minimum requirement of paying 55% of wages for a third of hours, as announced last month at the launch of the Winter Economic Plan, employers will have to pay for a minimum of 20% of usual hours worked, and 5% of hours not worked.

The government will now fund 62% of the wages for hours not worked. This more than doubles the maximum payment to £1,541.75 a month. In the most generous case, the taxpayer will now go from funding 22% of wages to just under half.

The scheme will, as before, be open to all small businesses and larger businesses that can show an impact on revenues.

It is aimed at addressing the gap in support for businesses in tier two restrictions, such as London and Birmingham, but is not explicitly tied to that status, and is available across the UK.

How will it work outside England?

The scheme is UK-wide. However, the system of tiered restrictions in England, which gave rise to the government’s newly increased economic support, is not.

While England has a three-tier system, Scotland is due to bring in a five-tier system of virus alert levels from 2 November.

The middle three will be “broadly equivalent” to the English three, but the Scottish system will add an extra tier at the bottom and one at the top.

Wales is about to enter a two-week national lockdown from 18:00 BST on Friday, while Northern Ireland began a four-week lockdown last Friday.

All the devolved nations will receive central government funding enabling them to give monthly grants of up to £2,100 to hotels, restaurants and B&Bs.

How did it play out politically?

“I’ve always said that we must be ready to adapt our financial support as the situation evolves, and that is what we are doing today. These changes mean that our support will reach many more people and protect many more jobs,” Mr Sunak said.

“I know that the introduction of further restrictions has left many people worried for themselves, their families and communities. I hope the government’s stepped-up support can be part of the country pulling together in the coming months.”

Responding to his statement, shadow chancellor Anneliese Dodds criticised the government for what she said was a “patchwork of poor ideas, rushed out at the last minute”.

She said its approach to support for areas entering tier three had been “nothing short of shambolic”.

In other political reaction, Greater Manchester mayor Andy Burnham tweeted that the new measures had not been “put on the table” during negotiations with the government this week that failed to agree a £65m package of support.

“Honestly, can barely believe what I’m reading here,” he said.

Were there any other new measures?

The chancellor also announced specific help for hospitality and leisure businesses in tier two areas.

English councils will be funded to give monthly grants of up to £2,100 to 150,000 hotels, restaurants and B&Bs. Devolved nations will be given the equivalent funding for other nations, under the Barnett Formula.

The generosity of the self-employment scheme has also been doubled from 20% to 40% of profits, with a maximum grant now of £3,750 over a three-month period.

 

But Anneliese Dodds, Labour’s shadow chancellor, said she had been calling for the government to “get ahead of the looming unemployment crisis and act to save jobs” for months.

“Instead, we’ve had a patchwork of poor ideas rushed out at the last minute,” she added, suggesting some people had already lost their jobs because of the chancellor’s “inaction”.

The wrath of mayors representing regions which are going into Tier 3 – the highest band of coronavirus restrictions in England – was also stirred.

Andy Burnham, mayor of Greater Manchester, said he could “barely believe what I’m reading”.

“Why on earth was this not put on the table on Tuesday to reach an agreement with us?” he asked, referencing the breakdown in talks between local leaders and the government earlier this week.

“I said directly to the PM that a deal was there to be done if it took into account the effects on GM businesses of three months in Tier 2.”

Sir Richard Leese, leader of Manchester City Council, tweeted: “Looks like Rishi Sunak is agreeing with Greater Manchester Leaders. Pity he couldn’t have done it two weeks ago.”

And Liverpool City Region mayor said: “It’s a shame that it took London coming under further measures for the chancellor to take action to support jobs and businesses.”

Though the moves were welcomed by Dame Carolyn Fairbairn, chair of the Confederation of British Industry.

She said they would “do even more to protect people’s livelihoods” and that firms will be “relieved to see that anomaly” of hospitality firms in Tier 2 which were getting “little extra support” coming to an end.

“This is a big step towards a more standardised approach of support for areas going into Tiers 2 and 3 and those businesses that face tough times who operate within them,” she added.

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