Friday 20 March 2020 6:18 pm

Coronavirus wage bailout: Government to cover 80 per cent of workers' salaries up to £2,500

The government will pay up to 80 per cent, or £2,500, of the salaries of British workers hit by the UK coronavirus crisis in a huge wage bailout.

Chancellor Rishi Sunak announced the extraordinary measures today after Prime Minister Boris Johnson ordered all pubs and restaurants, cafes and gyms to shut their doors tonight and not reopen.

Read more: Coronavirus: UK death toll rises by 39 to 177

“Employers will be able to contact HMRC for a grant to cover most of the wages for people who are not working but kept on payroll rather than being laid off,” Sunak said.

“Up to 80 per cent of wages [will be covered], or up to £2,500 a month. Employers can top up salaries further if they choose to.

“That means workers in any part of the UK can retain their job even if their employer cannot afford to retain them.”

Any British business, large or small, can apply for a wage bailout if it is struggling from the coronavirus fallout.

Sunak said the government will back date the wage bailout to 1 March and keep it open for at least three months.

‘No limit’ on wage bailout fund

The chancellor added he would extend that timescale if necessary, and told businesses there was “no limit” on how much money the government will make available for the scheme.

“We have never had a scheme like this in our country before and we are having to build our systems from scratch,” he added.

However, HMRC is working to ensure the first grants are available within weeks, Sunak added. Businesses can apply for the relief from Monday.

The chancellor repeated his call for firms affected by the UK coronavirus outbreak not to make people redundant in return for the huge wage bailout.

“The economic intervention we are announcing today is unprecedented in the history of the British state,” he added. 

“I know people are worried about losing their jobs and not being able to pay the rent or mortgage about not having enough set by for food and bills.

“To all those at home right now anxious bout the days ahead – you will not face this alone. But getting through this will require a collective national effort with a role for everyone to play. It’s on all of us.”

PM sticks to June target to kill coronavirus

Wage bailout: Boris Johnson has formally asked pubs and restaurants to close for the foreseeable future
Boris Johnson has formally asked pubs and restaurants to close for the foreseeable future (Photo by MATT DUNHAM / POOL/AFP via Getty Images)

Meanwhile, the Prime Minister reiterated his three-month target to flatten the curve of the UK coronavirus outbreak.

Yesterday he had appeared to row back on his aim to have sent the virus “packing” by June.

Read more: Coronavirus: PM urges Brits to be ‘reasonable’ and responsible as he says ‘tide will turn’ in 12 weeks

“We are going to do it with testing and new medicines and new technology that can see the disease as it’s transmitted,” Johnson said.

“We’re going to defeat the disease with a huge national effort to slow the spread by reducing unnecessary social contact,” the PM added.

“I know it’s been tough and inconvenient but these actions we are are all taking are taking the strain off the NHS.”

It came as UK coronavirus deaths hit 184 and infections rose to 3,297.

The NHS is under huge pressure to deal with the UK coronavirus crisis. And this afternoon London’s Northwick Park hospital announced a “critical incident” as it ran out of beds to treat Covid-19 patients.

Read more: London hospital Northwick Park declares critical incident after surge in coronavirus cases

Further cash flow support through the tax system to help businesses pay people and keep them in work deferring next quarter of vat payments – no biz vat payments between now and June. 

Government defers VAT payments for UK businesses

Sunak also said he would postpone companies’ VAT payments until June, in business relief worth over £30bn. The chancellor said that was equivalent to 1.5 per cent of GDP.

“I know it’s incredibly difficult out there. We in government are doing everything we can to support you. We are deferring over £30bn taxes to the end of the financial year,” he said.

It comes after the Bank of England slashed UK interest rates to a historic low of 0.1 per cent yesterday. And it also announced £200bn of quantitative easing in a bid to battle the UK coronavirus outbreak.

The government has already pledged £330bn in loans to keep businesses alive as people opt not to go out.

Read more: Bank of England slashes rates to historic low amid coronavirus pandemic

Businesses welcome Rishi Sunak’s measures

Dame Carolyn Fairbairn, CBI director-general, welcomed the intervention.

She said: “This is a landmark package of measures for business, people and jobs. 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.

“It marks the start of the UK’s economic fightback – an unparalleled joint effort by enterprise and government to help our country emerge from this crisis with the minimum possible damage.  An important day for our country.”

Read more: M&A in the UK falls by a third on coronavirus and recession fears

And Adam Marshall, director-general of the British Chambers of Commerce, added: “The chancellor has given businesses desperately needed breathing room at this critical moment.

“The deferral of VAT payments keeps money in the pockets of businesses so that they can pay their people and suppliers, and the commitment to cover wages of those unable to work will allow firms to retain jobs if they are forced to reduce their operations.

“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. Given that this situation continues to evolve, ministers must also keep the door open to additional measures to support business cash flow.”

What about the self-employed?

But Bectu, a union representing freelancers, criticised Sunak for not including self-employed contractors in his relief.

Head of Bectu,Philippa Childs, called it a “devastating blow” for such workers.

Read more: IR35: Businesses welcome delay, but many have already cut contractors

“These workers are looking to the Cchancellor in desperation for a vital lifeline and he has badly let them down,” she added.

“It is clear the chancellor simply doesn’t understand the hardship these workers are in- telling them to simply claim universal credit while other workers have their incomes protected is cruel and unfair.”

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