The UK Government will step in to help all employers pay their workers by covering 80% of the country’s wage bill in seismic new measures to tackle the coronavirus pandemic.
Chancellor Rishi Sunak made the announcement on Friday, saying the “coronavirus job retention scheme” will operate as a system of grants and cover 80% of people’s wages up to £2500 a month.
It aims to ensure as many staff as possible are kept on, particularly those in vulnerable sectors like retail, leisure and hospitality, as the country navigates the economic impact of the Covid-19 outbreak.
It comes as the Prime Minister told all pubs, bars, clubs, restaurants and cafes to close due to the coronavirus.
Boris Johnson said all four home nations of the UK had agreed to strengthen measures to tackle the Covid-19 pandemic.
All social and entertainment venues, also including theatres, cinemas, gyms and leisure centres, are now being told to close, the PM said.
Announcing further intervention in the economy, the Chancellor said the government will pick up “most of” the wages of workers in an economic response he dubbed “one of the most comprehensive in the world”.
Sunak 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.
“Employers will be able to contact HMRC for a grant to cover most of the wages of people who are not working but are furloughed and kept on payroll rather than being laid off.
“Government grants will cover 80% of the salary of retained workers up to a total of £2500 a month – that’s just above the median income.”
For those who still found themselves out of work, he said he was increasing the Universal Credit standard allowance for the next 12 months by #1,000 a year, and raising the working tax credit basic element by the same amount.
Sunak also said he would defer the next quarter of VAT payments for firms, until the end of June, in a £30bn injection into the economy.
It’s the latest in a series of economic measures unveiled by the new Chancellor following measures worth £30bn announced in the Budget, followed by an enormous £330bn bail-out package for businesses announced earlier this week.
Sunak promised further measures next week to ensure larger and medium-sized businesses will be able to access the credit they need.
He said the previously-announced business interruption loan scheme will now be interest free for 12 months rather than the original six.
Sunak added: “Thanks to the enormous efforts of our critical financial services sector those loans will now be available starting from Monday.”
Announcing the order to close all hospitality and leisure establishments – from pubs and restaurants through to gyms and swimming pools – the Prime Minister said they had to shut tonight and not open tomorrow.
Johnson said: “We need now to push down further on that curve of transmission between us.
“And so following agreement with all the … devolved administrations, we are collectively telling cafes, pubs, bars and restaurants to close tonight as soon as they reasonably can and not to open tomorrow.
“Though, to be clear, they can continue to provide take-out services”
The PM said he acknowleged the closures were a “huge wrench” to the country but said the government’s package of support for businesses and workers is “exceptional”.
He added: “Our message to business is we will stand behind you, we hope you will stand behind your workers.”