Workers who face losing their jobs due to the coronavirus pandemic will have most of their wages paid by the government, chancellor Rishi Sunak has announced.
The scheme will see the government pay 80% of wages for employees who cannot work due to the epidemic – up to £2,500 a month – to help employers keep them on instead of laying them off.
Sunak called the huge intervention “unprecedented in the history of the British state”.
At a Downing Street press conference, he 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, for 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 £2,500 a month – that’s just above the median income.”
The scheme will cover the cost of wages backdated to March 1 and and will be open before the end of April for at least three months. There is no limit on the funding available for it.
Sunak made an appeal to bosses to stand by their workers during the coronavirus crisis.
“Let me speak directly to businesses: I know it’s incredibly difficult out there – we in government are doing everything we can to support you,” he said.
“The government is doing its best to stand behind you and I’m asking you to do your best to stand behind our workers.”
The chancellor also revealed a £6bn injection into the welfare state and a £30bn tax deferment for businesses.
He announced:
- A deferment of the next quarter of VAT payments for firms, in a £30bn injection into the economy.
- An increase in the universal credit standard allowance by £1,000 a year for the next 12 months. The working tax credit basic element will rise by the same amount.
- Suspending the minimum income floor for benefits, meaning self-employed people can access universal credit at a rate equivalent to statutory sick pay for employees, which is £94 a week.
- Making the coronavirus business interruption loan scheme interest free for 12 months, rather than the six previously announced.
- Boosting welfare payments for renters to allow the local housing allowance to cover at least 30% of market rents
- Further suspending self-assessment payments to January 2021 to further support the self-employed
Sunak said: “We want to look back on this moment and remember the many small acts of kindness done by us and to us.
“We want to look back on this time and remember how we thought first of others and acted with decency.
“We want to look back on this time and remember how in the face of a generation-defining moment, we undertook a collective national effort and we stood together. It’s on all of us.”
Trade Union Congress general secretary Frances O’Grady, who has held talks with the chancellor on the package, said employers must now reassure staff their jobs are safe.
“This is a breakthrough,” she said.
“Rishi Sunak has shown real leadership.
“We’re glad he’s listened to unions and taken vital steps to support working families.
“Employers can now be confident they’ll be able to pay their wage bills.
“They must urgently reassure staff that their jobs are safe.”
But former Labour leader Ed Miliband said it was “inadequate” for self-employed workers and those in the gig economy.
Labour leadership candidate Rebecca Long-Bailey, meanwhile, urged the chancellor to go further in several areas, including forcing employers to keep staff on.
Shadow chancellor John McDonnell said Sunak had not gone “far enough or fast enough”.
“The government must give people the economic security to stay at home by lifting the level of statutory sick pay, but it appears that the government hasn’t done that today,” he said.
CBI director general Dame Carolyn Fairbairn welcomed the “landmark package” of measures to support the economy.
“The chancellor’s offer of substantial payroll support, fast access to cash and tax deferral will support the livelihoods of millions. Firms and employees will respond with relief and determination,” she said.
British Chambers of Commerce director general Adam Marshall said it would provide “desperately needed breathing room” for businesses.
“The government now needs to go foot-to-floor to ensure that details of the job retention scheme and loan guarantees reach firms on the ground as soon as possible,” he said.
It came as Boris Johnson ordered pubs, restaurants, shops, gyms and other public places to close tonight.
Sunak had already announced a £350bn package mainly to help businesses but has come under increasing pressure to step in and save workers who risked losing income or even their jobs.
Millions of working parents face potential job losses from Monday as they will need to look after their children when schools close to all but the pupils of “critical workers” needed to help the NHS or food retailers.
Anger boiled over in the Commons on Thursday as even Tory MPs warned that millions could be left unemployed.