Wage subsidy scheme opens as start-ups get new £1.25bn package
Applications open today for the government’s coronavirus wage subsidy scheme as the Treasury also announces a further £1.25bn package for start-ups and research and development firms.
The job retention scheme will see the government pay 80 per cent of wages, up to £2,500 a month, to furloughed employees unable to work because of the coronavirus pandemic.
Firms are now able to apply for the scheme through a new HM Revenue and Customs online portal, with payment coming through within six working days.
The initiative was extended earlier this week until the end of June.
Chancellor Rishi Sunak said today that the package would “protect millions of jobs across the country”.
The Resolution Foundation, a left-leaning think tank, estimates that eight million people will be paid out through the scheme and that it will cost up to £40bn for every three months it runs.
The Treasury also announced today it was giving out £1.25bn to “protect firms driving innovation in UK” during the coronavirus crisis.
This will involve a new £500 million loan scheme for “high-growth firms” and £750 million of support for small and medium sized businesses focusing on research and development.
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Commenting on today’s roll out of the job retention scheme, Institute of Directors director general Jonathan Geldart said the initiative was “crucial to protecting jobs and ensuring the recovery, when it comes, can take off as quickly as possible”.
British Chambers of Commerce director general Adam Marshall added: “With April’s payday approaching, it is essential that the application process is smooth and that payments are made as soon as possible.
“Any delay would exacerbate the cash crisis many companies are facing and could threaten jobs and businesses.”
Figures from the British Chambers of Commerce indicate that two-in-three UK companies have furloughed at least some of their workforce to enter the scheme.
The Resolution Foundation, meanwhile, believes that 46 per cent of the hospitality and retail sectors will furlough employees.
This would translate into 3.1m people.
Daniel Tomlinson, an economist at the Resolution Foundation, said the job retention scheme was “what stands between Britain experiencing high unemployment over the coming months, and catastrophic depression-era levels of long-term joblessness”.
“It is proving particularly essential in big, low-paying sectors like hospitality and retail, where around half the workforce are no longer working,” he said.