UK workers will get 67% of wages if businesses are forced to close - what Rishi Sunak said

Friday, 9th October 2020, 3:32 pm
Updated Friday, 9th October 2020, 3:33 pm
Chancellor Rishi Sunak is expected to make an announcement today (Photo: Leon Neal/Getty Images and Shutterstock)
Chancellor Rishi Sunak is expected to make an announcement today (Photo: Leon Neal/Getty Images and Shutterstock)

Chancellor Rishi Sunak has announced further financial support for businesses that may close in the coming weeks.

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A new scheme will come into place which will subsidise the wages of those who work in businesses, including pubs and restaurants, which may be forced to close due to tougher lockdown restrictions.

What did Rishi Sunak announce?

The Chancellor called the scheme an expansion of the Job Support Scheme, which is aimed at helping businesses that may be forced to close in the coming weeks and protect jobs, a “safety net”.

This announcement comes as pubs and restaurants in the north of England are expected to be told they must close by law, as part of a potential three-tier local lockdown system which is expected to be confirmed on Monday 12 October.

The new financial support scheme will see the state subsidise part of workers’ wages in the industries which are directly affected by local lockdowns. The government will pay two thirds of employees’ salaries in UK businesses which are required to close due to coronavirus restrictions.

These businesses will receive grants to pay the wages of staff who cannot work, with the government paying two-thirds of each employee’s salary (67 per cent), up to a maximum of £2,100 a month.

Mr Sunak said it was an "expansion" of the Job Support Scheme, which begins on 1 November and will be available for six months.

The Chancellor said, “Throughout this crisis my priority has always been to protect jobs so today I’m announcing an expansion of our Jobs Support Scheme, specifically to protect those jobs of people who work in businesses who may be asked to close.

"If that happens those workers will receive two thirds of their wages for the time that they’re unable to go to work.

“I hope this provides reassurance and a safety net for people and businesses in advance of what may be a difficult winter.”

A Treasury source says it could roughly cost hundreds of millions a month.

What is the Job Support Scheme?

The Job Support Scheme comes into place on 1 November to replace the original Coronavirus Job Retention Scheme, which ends on 31 October.

It offers eligible workers three quarters of their normal salaries for six months.

In order to be eligible for the Job Support Scheme, workers need to be in a “viable job”, where they can still work for at least one-third of their usual working hours.

The government and the employer will then each pay one-third of the remaining hours, which would mean employees would receive at least 77 per cent of their normal pay.

Figures show the economy grew by only 2.1 per cent in August, which is far below what was expected, especially with the ‘Eat Out to Help Out Scheme’ running throughout the month for the whole of the UK.

What is the three-tier lockdown system?

Stricter measures are expected to be put in place in England next week to slow the spread of the virus, including the possible closure of pubs and bars.

A three-tier system for local lockdowns is expected to be announced by the government.

It would see different parts of the country placed in different categories of restrictions based on case rate per 100,000 in each region.

The new rules, which are expected to be announced by Monday 12 October, could see large parts of England in the highest tier, with pubs, restaurants and cafes closing.

The tiers expected to be announced:

Tier 1: Areas listed as ‘tier one’ would continue to adhere to restrictions currently in place, such as the rule of six and a maximum of 15 guests at weddings and civil partnership ceremonies

Tier 2: The second tier would ask members of the public not to meet anyone outside their household in private dwellings, including gardens, and would also restrict care home visits to exceptional circumstances only

Tier 3: The third tier would require no social contact outside your own household in any setting, and restrictions on overnight stays away from home. Hospitality and leisure businesses would also have to close.

This comes after Scotland recently announced stricter measures, which include all pubs and restaurants across five health board areas in central Scotland closing from Friday 9 October.

What are the new restrictions in Scotland?

In Scotland, all licenced premises in the areas of Greater Glasgow & Clyde, Lanarkshire, Ayrshire & Arran, Lothian and Forth Valley will have to close from Friday evening, at 6pm, for a period of 16 days.

Pubs, restaurants and cafes will be able to open throughout the rest of the country, but only between the hours of 6am and 6pm.

Alcohol will only be able to be served outdoors “up to the existing curfew time of 10pm, and subject to the 6/2 rule on group size.”

Other businesses including snooker and pool halls, indoor bowling alleys, bingos and casinos will be forced to close in the affected areas from Saturday 10 October for two weeks.

Contact sports for people aged 18 and over will be suspended for the next two weeks, with an exception for professional sports, and indoor group exercise activities will not be allowed. However, gyms can remain open for individual exercise.

Outdoor live events will also not be permitted in these five areas for the next two weeks.