New support measures for workers and businesses impacted by the latest round of coronavirus restrictions will be unveiled today amid warnings of a ‘tsunami’ of job losses over winter.
Chancellor Rishi Sunak has axed his autumn budget and will instead launch a ‘Winter Economy Plan’ to address how he will bolster the economy in the wake of the worsening crisis.
His initiative will include VAT cuts, loans for hard-hit businesses and wage subsidies, according to reports.
It could also see the Government and firms share the cost of topping up wages for employees only able to work part-time due to the pandemic.
The Treasury said work on the second support scheme, which will replace the current furlough scheme, had been taking place in parallel with budget preparations, which have now been shelved due to coronavirus uncertainty.
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Mr Sunak was expected to reveal how he plans to bail the economy out of the Covid-19 recession that has already put around 700,000 people out of work in his autumn budget, with measures reportedly including investing in infrastructure and driving Boris Johnson’s ‘levelling up agenda’.
His plans were blown off course following the rapid rise of coronavirus cases that saw the hospitality sector hit with a 10pm curfew and U-turn on the ‘back to work drive’ that was hoped to give town and city centres a boost.
With restrictions set to last six months and a second national lockdown an increasingly possibility, the Chancellor has come under pressure from business groups, MPs and unions to extend the furlough scheme.
The 52 billion pound support package, which pays most of the wages for workers placed on leave, has gradually been wound down and is set to expire at the end of October.
Mr Sunak has repeatedly ruled out a wholesale extension of the programme but has been called upon to find other options amid warnings the new lockdown measures could put 540,000 people out of work.
One option reportedly being considered to replace the furlough scheme is Germany’s Kurzarbeit, or shorter work-time policy, under which firms can cut working hours in economic downturns with the state replacing part of their lost income.
Another proposal put forward by the CBI business group would see subsidies for firms that can offer staff at least 50% of their normal hours, with the cost for non-working hours shared equally by the company, the Treasury and the employee.
The Treasury said: ‘We will always be honest with people about the difficult trade-offs that are involved here.
‘Not between health and the economy, but between keeping people in jobs and helping them find new ones. And between help in the here and now and rebuilding in the future. That’s what people deserve.’
Mr Sunak’s emergency plan comes after Prime Minister Boris Johnson said the country could have to cope with the new restrictions until March.
At Prime Minister’s Questions on Wednesday, the Mr Johnson was repeatedly challenged about the looming prospect of support being withdrawn from firms and workers despite saying the latest restrictions are likely to be in place for six months.
The furlough scheme has cost the Government £39.3 billion to date, with £3.9 billion between August 16 and September 20 alone, according to the latest figures released. It’s total cost is expected to exceed £50 billion.
Labour leader Sir Keir Starmer blamed Government failures on the new restrictions and said a ‘Plan B’ is needed to help the economy recover from the pandemic as rising cases derail recovery.
On Wednesday he made a televised address to the nation slamming the UK’s coronavirus testing system, which he branded a ‘national scandal’.
The coronavirus contact tracing app was finally launched across England and Wales on Thursday following months of delay and questions over its effectiveness.
Health Secretary Matt Hancock said it came at a ‘tipping point in our efforts to control the spread of this virus’ and urged everyone who could to download and use it.
However, problems have already emerged as its revealed it does not work on older iPhones.
It comes after a further 6,178 coronavirus cases were recorded in the UK on Wednesday, the highest daily rise since May.
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