The government is to pay the wages of employees unable to work due to the Coronavirus pandemic.
In a radical move aimed at protecting people’s jobs the government today laid out a series of measures to help affected workers.
It will pay 80% of wages for employees unable to work due to the coronavirus pandemic, worth up to £2,500 a month.
The “unprecedented” measures would stop workers being laid off due to the crisis, chancellor Rishi Sunak said.
Firms have warned the virus could see them collapse, wiping out thousands of jobs, as life in the UK is put on hold.
Mr Sunak said closing pubs and restaurants would have a “significant impact” on businesses.
It is understood that the wage subsidy will apply to firms where bosses have already had to lay off workers due to the coronavirus, as long as they are brought back into the workforce and instead granted a leave of absence.
The wages cover, which relates to gross pay, will be backdated to the start of March and last for three months, but Mr Sunak said he would extend the scheme for longer “if necessary”.
The scheme, which will be run by HMRC, is expected to make the first grants to businesses “within weeks”, a Treasury spokeswoman said, and the department is hoping all payments will be made by the end of April.
The Federation of Small Businesses warned this delay meant many small firms would still face “an immediate, potentially terminal cash flow crunch”.
Chairman Mike Cherry said banks now needed to play their part and “ensure that any small business owner seeking a 12-month interest free loan from Monday is helped immediately.”
Shadow Chancellor John McDonnell criticised the new job retention scheme, saying it needed to “go a lot farther and a lot faster.”
He said the government “has shifted under the pressure we [Labour] put on him” but raised concerns that the plans to pay 80% of workers’ wages where needed represented “quite a significant wage cut” and warned of “weeks” of delays.
The chancellor stated grants will be available for “as many jobs as necessary” he said before also announcing £1bn of support for renters, tax relief for the self-employed and increases in universal credit payments.
Increases in universal credit a Tax credits
The chancellor increased the universal credit standard allowance for the next 12 months by £1,000 a year, and raised the working tax credit basic element by the same sum.
Self-employed workers will be allowed to defer self-assessment payments until January 2021 and can claim universal credit at a rate equivalent to statutory sick pay.
However, the UK has one of the lowest rates of SSP in Europe at just £94.25 per week, meaning many freelancers and self-employed workers could see a significant drop in their pay.
Former Labour leader Ed Milliband tweeted: “This is a very welcome announcement for employed workers. I am afraid it appears inadequate for the millions of self-employed, gig economy workers.”
IPSE, which represents self-employed workers, said the government had done “nowhere near enough“.
It came as pubs, bars, restaurants and leisure centres shut down in the latest intensification of social distancing measures designed to slow the spread of Covid-19.
Those restrictions, while necessary to protect public health, will be disastrous for many businesses and jobs as economic activity slows down drastically.
The chancellor said: “I have a responsibility to make sure that we protect, as far as possible, people’s jobs and incomes.
“Today I can announce that in the first time of our history, the government is going to step in and help pay people’s wages.
“We’re setting up a new coronavirus job retention scheme. Any employer in the country small or large, charitable or non-profit, will be eligible for the scheme.
The government has faced huge pressure to intervene to support workers to prevent mass unemployment as anti-virus measures have seen many firms’ revenues evaporate almost overnight.
The wage package is the latest in a string of government moves aimed at easing the burden on businesses and their employees.
“I know that people are worried about losing their jobs, about not being able to pay the rent or mortgage, about not having enough set by for food and bills… to all those at home right now, anxious about the days ahead, I say this: you will not face this alone,” Mr Sunak said.
‘Stand behind workers’
The chancellor also urged employers to stand by their workers during the coronavirus crisis.
“I know it’s incredibly difficult out there.
“The government is doing its best to stand behind you and I’m asking you to do your best to stand behind our workers,” he said.