Friday 9 October 2020 3:23 pm

Rishi Sunak extends furlough scheme for businesses facing lockdown

Chancellor Rishi Sunak has extended the furlough scheme for six months for businesses across the UK required to close under local lockdowns, as further restrictions loom ahead for parts of England.

Sunak today said the government will pay two thirds of employees’ salaries to businesses forced to shutter under fresh lockdown measures. 

Read more: Luke Johnson: 1m employees on furlough face redundancy

Firms whose premises are legally required to shut “for some period over winter as part of local or national restrictions” will receive grants of up to £2,100 per month to pay the wages of staff who cannot work, the Treasury announced today.

Businesses will not be required to contribute to wages under the new scheme, but will have to cover National Insurance and pension contributions.

Cash grants for businesses required to close in local lockdowns will also increase to £3,000 per month. 

The government will launch a three-month review of the scheme in January to assess whether the “levels and criteria” of support are appropriate.

Companies can only claim the wage grant while subjected to state restrictions, and workers will have to have been off for at least one week.

Announcing the measures, Sunak said: “Throughout the crisis the driving force of our economic policy has not changed. I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves.

“The expansion of the Job Support Scheme will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time.”

The announcement marks a sharp U-turn from current plans to scrap the furlough scheme on 31 October, following mounting criticism from industry figures.

Earlier this month the chancellor announced a new job support scheme would replace the furlough scheme and provide support for staff working at least a third of their hours.

But senior figures in the hospitality industry warned the new scheme would not be enough to support jobs in businesses already on their knees after months of closure and the recent introduction of a 10pm curfew.

Greater Manchester mayor Andy Burnham suggested he would take the government to court to stop new measures being introduced without “proper compensation and a local furlough scheme for staff”.

Read more: Pubs and bars in row over late night levy as 10pm curfew sinks sales

UK Hospitality chief executive Kate Nicholls said: “To save jobs and businesses, government support for hospitality must be at the same levels of the furlough scheme where there are forced closures, and two thirds of wages where curfews and other restrictions are seeing trade hit hard.

“The inarguable fact is that all of the restrictions currently in place or under consideration, make it impossible for most venues to operate anywhere near profitably.” 

Northern lockowns

It comes as further local lockdowns are expected across the North of England, with Nottingham earmarked to join cities such as Liverpool, Leeds and Manchester with new restrictions.

The plans, which could come into effect as soon as Monday, follow the decision by Scotland’s first minister Nicola Sturgeon to close all pubs and restaurants in Scotland for at least two weeks.

The government this week introduced a new “traffic light system to assess the need for further restrictions in regions across England following a sharp spike in infections.

The system will work alongside the new NHS Test and Trace app to form risk profiles of areas around the country.

Read more: Coronavirus recovery stalls as UK economy grows just 2.1 per cent in August

There are currently no areas in the UK that are considered “low-risk” by the new app.

It comes after the UK yesterday reported 17,540 new coronavirus cases, marking a 3,300 jump on Wednesday’s figure.

The Office for National Statistics today said the number of Covid cases in England has “increased rapidly” over the past few weeks, after the country reported an average of 17,200 new cases per day in private households between 25 September and 1 October.

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