UK's Sunak launches pared-back job support scheme as
COVID surges
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[September 24, 2020] By
David Milliken and Andy Bruce
LONDON (Reuters) - British finance minister
Rishi Sunak announced on Thursday fresh plans to help the
pandemic-ravaged economy with a new jobs support scheme to help keep
people employed on shorter hours, but warned he could not save every
business or role.
Sunak also said he would extend support loan repayments for businesses
and delay ending a tax cut for the hospitality sector which has been
severely hit by COVID-19 restrictions.
"These are radical interventions in the UK labour market, policies we
have never tried in this country before," Sunak told parliament as he
announced the government's so-called "Economic Winter Plan".
"The primary goal of our economic policy remains unchanged - to support
people’s jobs - but the way we achieve that must evolve," he added,
acknowledging, however, "I cannot save every business, I cannot save
every job."
At the heart of the new measures is a replacement for the Coronavirus
Job Retention Scheme, which supported 8.9 million private sector jobs at
its peak in May and ends next month.
Under the new programme, support will only be available to workers whose
employers keep them on at least a third of their normal hours. For
unworked hours, government and the employer will each pay staff at a
third of their normal rate, with a maximum contribution of 698 pounds
($889) a month.
"The government will directly support the wages of people in work,
giving businesses who face depressed demand the option of keeping
employees in a job on shorter hours, rather than making them redundant,"
Sunak told parliament.
Around 5 million jobs were still supported by the previous programme at
the end of July, according to tax data, and earlier on Thursday
Britain's statistics agency estimated that one in eight workers were
being helped by the programme in early September.
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Shoppers are reflected in the window of a closed shop following the
outbreak of the coronavirus disease (COVID-19) in Chester, Britain,
August 10, 2020. REUTERS/Phil Noble
TAX CUT EXTENDED
The pandemic has killed nearly 42,000 people in Britain, the worst death toll in
Europe. The United Kingdom is borrowing record amounts to pump money through an
economy on track for its biggest annual contraction in at least 100 years.
Sunak also said he would extend a cut to value-added tax for hotels, cafes and
restaurants until March 31 to support the sectors which are struggling with
demand.
He also introduced a new scheme to give businesses flexibility to repay loans
taken out during the coronavirus crisis, giving them up to 10 years to repay
rather than six.
Under the government's Bounce Back Loan Scheme, 1.3 million small businesses
have taken out a total of 38.0 billion pounds ($48.4 billion) in loans worth up
to 50,000 pounds each, from banks which have received a 100% state guarantee.
The Bank of England forecast last month that unemployment would jump to 7.5% by
the end of the year if there were no replacement for the existing furlough
scheme ending at the end of October, up from 4.1% in the three months to July.
The opposition Labour Party said the new support had come too late.
The plunge in demand for flights, clothes and nights out has already led to tens
of thousands of workers losing their jobs from companies such as British
Airways, Rolls-Royce, Marks & Spencer and Whitbread.
($1 = 0.7852 pounds)
(Writing by Michael Holden; Editing by Kate Holton and Andrew Cawthorne)
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