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The Chancellor’s radical rescue will help protect jobs and support businesses this winter. Firms are to be offered subsidies to top up workers’ wages in an effort to curb a surge in unemployment when his furlough scheme ends next month. His Job Support Scheme will pay a 22 percent share of a monthly salary for employees who can work part-time in “viable jobs”. Cash grants will be available for the self-employed.
Mr Sunak also extended his temporary VAT cut from 20 percent to five percent for hospitality firms until the spring and expanded his coronavirus business loans.
The Chancellor told MPs: “I know people are anxious and afraid right now, but I want them to know that we have a plan to protect jobs and support businesses.
“What was true at the beginning of this crisis remains true – it’s on all of us to get through this together.”
Mr Sunak declined to put an overall price tag on his Winter Economy Plan yesterday.
But experts at forecasting consultancy Capital Economics estimated the measures could total at least £5billion.
He hinted at tax rises to come by warning the Government faced “hard choices” and admitted his measures could not prevent all job losses.
He added: “As I’ve said throughout this crisis, I cannot save every business, I cannot save every job – no Chancellor could.
“But what we can and must do is deal with the real problems businesses and employees are facing now.”
Mr Sunak also said the country and the economy will have to adapt to life with coronavirus.
He said: “We must learn to live with it and live without fear.”
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Key measures in the Winter Economy Plan include:
– A new Job Support Scheme to be introduced from November 1, when the Treasury support for furloughed workers ends. Under the six-month scheme, the Government will subsidise wages of employees working at least a third of their usual hours.
Participating employers will be expected to pay 55 percent of their usual salary while the Treasury will contribute a further 22 percent. Mr Sunak expects the scheme to cost around £300million a month for every million employees involved.
– The Government will extend the Self-Employment Income Support Scheme Grant to provide grants worth up to £1,875.
– A 15 percent VAT cut announced for pubs, restaurants and other hospitality businesses announced earlier this year will be extended from mid-January to the end of next March. The Chancellor expects the extension to add £800million to the existing £2.5billion cost of the tax cut.
– More than a million businesses that took out Bounce Back Loans launched earlier this year will be able to benefit from a new Pay As You Grow flexible repayment system. The measure will stretch the length of the loan from six years to 10, which will cut monthly repayments by nearly half. Interest only periods of up to six months and payment holidays will also be available to businesses.
Mr Sunak told MPs: “These are radical interventions in the UK labour market – policies we have never tried in this country before.”
The Chancellor said there were “reasons to be cautiously optimistic” about the economy with three consecutive months of growth. He added: “Millions of people have moved off the furlough and back to work.
“But the resurgence of the virus, and the measures we need to take in response, pose a threat to this fragile economic recovery.
“We need to face up to the tradeoffs and hard choices coronavirus presents. And there has been no harder choice than the decision to end the furlough scheme.” The Chancellor warned that the Bank of England and the Office for Budget Responsibility were forecasting millions more will be unemployed by the end of the year.
Rain Newton-Smith, chief economist at the Confederation of Rain Newton-Smith praised the moves British Industry, said: “The bold steps by the Treasury will save hundreds of thousands of jobs this winter.
“With many businesses still on their knees, this new package will encourage firms to keep more staff on.”
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