LONDON – The British government said Friday it will pay two thirds of the salaries of workers in companies that have to close as a result of new coronavirus restrictions widely expected to come into effect next week.
In a change of policy, Treasury chief Rishi Sunak has responded to calls from businesses, local leaders and unions to provide a financial package to prevent mass job losses in sectors that are expected to be subject to tighter restrictions, such as pubs and restaurants in parts of northern England.
“I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves,” Sunak said. “The expansion of the Job Support Scheme will provide a safety net for businesses across the U.K. who are required to temporarily close their doors, giving them the right support at the right time.”
Sunak would not be drawn on what businesses would be forced to close but said the rise in cases and hospital admissions in certain parts of the country is a “concern” that requires a change in approach.
The U.K. as a whole has suffered Europe’s deadliest outbreak, with over 42,600 deaths. The latest daily figures published Friday showed 13,864 new cases. Though down on the previous day's 17,540, the numer is around double the level from a week earlier. As infections rise, the number of people requiring hospitalization increases followed by deaths. The latest figures show the number of people being hospitalized fell slightly to 597, but the daily death toll rose to 87, the highest since early July.
With infections rising, the pressure on Prime Minister Boris Johnson to impose further local restrictions has grown. He is expected to back a new three-tier local lockdown system, which could see hospitality venues in coronavirus hotspots such as the northern cities of Liverpool, Manchester and Newcastle, being temporarily closed. Restrictions are already being tightened Friday in Scotland, where pubs in the two biggest cities, Glasgow and Edinburgh, have to close for 16 days.
Under the terms of the new financial support package, the government will pay 67% of the salaries of workers who won’t be able to work, up to a maximum of 2,100 pounds ($2,730) a month. Employers will not be required to contribute towards wages.
Sunak also said cash grants for businesses required to close will also be increased to up to 3,000 pounds per month.
Businesses will only be eligible to claim the grant while they are subject to restrictions and employees must be off work for a minimum of seven consecutive days. The changes will take effect from Nov. 1 and will be available for six months, with a review in January.
A more generous nationwide program will expire at the end of October, having already cost the government nearly 40 billion pounds. At the height of that program, the government paid 80% of the salaries of furloughed workers, keeping a lid on unemployment. That is being succeeded by the less generous Jobs Support Scheme, which will see the government pay up to 22% of wages for people returning to work from furlough from Nov. 1.
Business and union leaders agreed that the modified scheme will help protect jobs.
Carolyn Fairbairn, director general of the Confederation of British Industry, said the change "should cushion the blow for the most affected and keep more people in work," while noting that 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."
Frances O’Grady, general secretary of the umbrella Trades Union Congress, said the scheme will protect jobs in businesses forced to close but urged more support for companies that are not required to close but are nevertheless hurt indirectly by the new restrictions.
Closing pubs and restaurants will be a bitter blow to the sector, barely three months after reopening. Figures released Friday showed the sector was largely behind the 2.1% increased in GDP recorded from the previous month.
With infections rising and restrictions returning, the British economy is widely expected to slow over the winter. Despite four months of growth following a dramatic near-quarter contraction, the economy remains 9.2% smaller than it was before the pandemic.