Hundreds of thousands of workers will have 67% of their wages paid by the government after Rishi Sunak was forced to expand coronavirus support.
In a major U-turn, the Chancellor today announced a change to the Job Support Scheme for workers who would have been left high and dry when furlough ends on November 1.
Instead of having to work at least a third of their normal hours to qualify for support from November 1, staff stuck at home can now continue to qualify for cash.
And instead of the government paying 22% of wages while employers pay 55%, the government will pay two-thirds of wages – while employers pay nothing at all.
But in a major catch, the UK-wide, six-month scheme will only help workers at venues that have been ordered to shut completely by the government.
That throws a lifeline to any northern pubs and restaurants that are forced to close in local lockdowns next week. It also helps places across the UK that have remained shut since March, like nightclubs and strip clubs.
Yet there will be no extra help for venues that have their hours or service cut back in a local lockdown, but stay open.
And there is no extra help for pubs and restaurants crippled by the 10pm curfew across England.
Even firms that do qualify will only be able to start reclaiming the wage cash for their workers in December.
There is nothing to help venues like theatres, cinemas and weddings venues that are closed in all but name, but aren’t actually legally shut.
And there is nothing new for the self-employed – who must wait until January for a three-month grant worth just 20% of their average profits, up to £1,875.
A joint statement tonight by the mayors of Greater Manchester, North Tyne, Sheffield City and Liverpool City said: “What has been announced by the Chancellor today is a start.
“But, on first look, it would not appear to have gone far enough to prevent genuine hardship, job losses and business failure this winter.”
It comes after northern leaders were left furious when plans to shut pubs and restaurants leaked to the media without them having any say.
Boris Johnson is set to replace local lockdowns with a new “three-tier” system on Monday that will slap tougher curbs on areas such as Manchester, Newcastle or Liverpool.
Skills minister Gillian Keegan admitted on BBC Question Time: “This is serious – it is getting out of control, and we have to do something to bring it back under control.”
While Tier 1 will reflect current England-wide rules and Tier 2 reflects current local lockdowns, some areas will be hurled into the far more dramatic Tier 3.
Reports suggest pubs and restaurants will be forced to shut and thousands of vulnerable locals told to start “shielding” once more in Tier 3 areas.
Mr Sunak claimed the scheme will provide “reassurance and a safety net” as the country braces itself for a “difficult winter”.
Today’s announcement will cover pubs that are forced to close completely, but not those that only have their hours cut back.
It will, however, cover any venue that is ordered to stop serving food or drink indoors – even if it’s allowed to carry on serving outdoors or as a takeaway.
The scheme means hundreds of thousands of stricken workers will get 67% of their wages for staying at home, up to a maximum of £2,100 a month.
The sum for stranded workers is down from 80% they got under the original furlough scheme.
But it is far better than the scheme Mr Sunak announced just weeks ago, which would have cut their funding to £0.
GMB Acting General Secretary John Phillips said: “Rishi Sunak has today served up a dish of support that is too unsubstantial, leaving many workers struggling to put food on the table.
“In workplaces now forced to close, the imposition of an effective 33% pay cut will leave many without enough to live on and pay the bills, given how low wages were in the first place.”
Meanwhile Labour warned workers could spend weeks left in the lurch before the new scheme starts on November 1.
While they can claim furlough until then, staff must have previously been on furlough at some point this year. If they weren’t, they’ll only start qualifying for cash from November 1.
Shadow Chancellor Anneliese Dodds said: “The fact the Chancellor is having to tear up his Winter Economic Plan before the autumn is out demonstrates the chaos and incompetence at the heart of government.
“His delay in delivering support has caused unnecessary anxiety and job losses.
“Even at this late stage, he still has no plan to support sectors that are currently unable to operate at full capacity.
“None of this was inevitable if the Chancellor had just taken his fingers out of ears and listened to the warnings from Labour and others.”
TUC General Secretary Frances O’Grady said: “This scheme will protect jobs in businesses forced to close by local restrictions. But ministers still need to do more to stop the devastation of mass unemployment.
“Firms which aren’t required to close but will still be hit by stricter local restrictions need a more generous short-time working scheme.
“And there needs to be extra help for self-employed people in local lockdown areas too.”
Treasury sources expect the package to cost the taxpayer hundreds of millions of pounds a month, and billions of pounds over six months.
It will last for six months initially, but will be reviewed – including the amount paid to firms – after three months.
Workers will have to be off completely for at least seven days in order to qualify for the scheme.
However, in local lockdowns they can cycle between the expanded scheme and the normal Job Support Scheme, which requires them to work a third of normal hours.
Under the new scheme, firms that are forced to shut will not have to pay anything towards their workers apart from National Insurance and pension contributions.
The Treasury estimates that more than half of the workers who will use the scheme don’t earn enough to have those contributions anyway.
For those who do have contributions paid, they comprise on average 5% or less of their salary, officials said.
Meanwhile grants for firms forced to close in England have been updated from the current system.
Currently the largest firms can claim £1,500 at the end of every three weeks they are shut, while small and medium-sized firms can claim £1,000 every three weeks.
The system is now being made more generous. Businesses will now receive the money every two weeks.
Small businesses with a rateable value of or below £15,000 can now claim £1,300 per month; medium sized businesses with a rateable value between £15,000 and £51,000 can claim £2,000 per month; and larger businesses can claim £3,000.
Grants are for England but there will be £1.3bn match funding to allow Scotland, Wales and Northern Ireland to do the same.Grants are administered by councils.
It comes as grim new studies today showed the virus is surging – and worst of all in parts of the Midlands and the north.
Office for National Statistics (ONS) data estimated 224,400 people in England had coronavirus between September 25 and October 1, equating to about one in 240 people.
The figure is almost double the 116,600 people who were estimated to have Covid-19 in the previous week.
And a separate React study showed coronavirus cases are doubling about twice as fast in the North West, Yorkshire and the West Midlands as for the whole of England.
Experts behind the study suggested the rate of growth of the epidemic across England has slowed in the last month, but the country was now at a “critical point in the second wave”.
The R rate was however slightly lowered to 1.2 to 1.5 for the whole of the UK, down from 1.3-1.6 a week ago.
Dame Carolyn Fairbairn, director-general of the CBI, said: “The steep rise in infections in some areas means new restrictions to curb numbers feel unavoidable.
“The Chancellor’s more generous job support for those under strict restrictions should cushion the blow for the most affected and keep more people in work.
“But many firms, including pubs and restaurants, will still be hugely disappointed if they have to close their doors again after doing so much to keep customers and staff safe.”
TSSA union leader Manuel Cortes said: “It’s been blindingly obvious to everyone except our Government that for the public to comply with lockdowns without being condemned to poverty, then support must be given.
“We desperately need support for our travel trade, which has effectively been put into lockdown as an entire sector.”
Torsten Bell, Chief Executive of the Resolution Foundation think tank, said: “The Chancellor is right to have brought back a targeted version of the furlough scheme to pave the way for further lockdown restrictions, both local and national, in the weeks to come.
“It will particularly benefit the hospitality and leisure sectors that are most likely to be required to close.”
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