Rishi Sunak announces new support for businesses closed by local lockdowns

Rishi Sunak

Rishi Sunak has announced a six-month job support scheme in which the government will pay two thirds of workers’ wages for businesses that are forced to shut.

Pubs and restaurants in northern England will be closed next week in an effort to prevent hospitals from being overwhelmed by the rising number of coronavirus cases.

A new system of restrictions divides England into three tiers of severity. Merseyside and other parts of northern England will be put in the highest category as some hospitals have started to run out of dedicated coronavirus beds. Businesses such as pubs, restaurants and cafés will be forced to close.

The chancellor announced that for such businesses the government will cover the cost of two thirds of wages, up to a maximum of £2,100 per month per person. Employers will be required to meet the cost of national insurance payments and pension contributions.

The government will also increase grants available for businesses from up to £1,500 every three months to £3,000 a month, payable in two-week instalments.

Mr Sunak said that the new support was necessary as the nation faces a “difficult winter”. He said: “Throughout this crisis my priority has always been to protect jobs so today I’m announcing an expansion of our jobs support scheme, specifically to protect those jobs of people who work in businesses who may be asked to close.

“If that happens those workers will receive two thirds of their wages for the time that they’re unable to go to work. I hope this provides reassurance and a safety net for people and businesses in advance of what may be a difficult winter.”

The chancellor denied that his plan was a rebranded furlough scheme, which he had declined to extend by arguing it was “fundamentally wrong” to hold people in jobs that only exist inside the scheme.

He said: “This is a very different scheme to what we’ve had before. “This is not a universal approach, this is an expansion of the jobs support scheme specifically for those people who are in businesses that will be formally or legally asked to close so in that sense it’s very different.

“I’ve always said that we will adapt and evolve our response as the situation on the health side adapts and evolves.”

The scheme will also be open to businesses that have already been forced to close, such as nightclubs. It is significantly more generous than the successor to the wage support scheme, announced, last month, which subsidises a fifth of part-time workers’ wages. However, it still falls short of demands from unions that the government cover 80 per cent of people’s wages, as it did in the original furlough scheme which ends on October 31.

One minister said that there had been frustration in government over the Treasury’s failure to bring forward the measures sooner. They argued that the package should have been ready two weeks ago along with the an economic plan for the winter, because it had been obvious that the extra funding would be needed.

 Speaking about the announcement Rhys Wyborn, employment partner at law firm, Shakespeare Martineau, said: “With further restrictions on the horizon, today’s announcement appears to be an acceptance by the Government that businesses need further support to survive the second wave.

“Slightly more generous than the original furlough offering, this update provides a glimmer of hope to businesses facing closure.

“In light of the proposed three-tier lockdown system, this is particularly positive news for the hospitality and leisure sector. After the success of the Eat Out to Help Out scheme, the 10pm curfew has caused serious issues for hospitality businesses, with many facing a difficult future. However, increased support from the Government could allow these businesses to close without worrying whether they’ll be able to open again.

“This extra help may be enough to save jobs that could have been lost under harsher restrictions, but the threat of redundancies still looms. For businesses on the brink that aren’t forced to close under the new measures, this announcement may not be as welcome.

“Time will tell as to whether this extension of the Job Support Scheme will be enough to help employers survive the difficult winter months.”