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Support for workers

Wages paid, bars shut, but self-employed lose out

Rishi Sunak

Rishi Sunak: protectio

Chancellor Rishi Sunak today announced a huge rescue package for British business, saying the government will pay 80% of workers’ wages in order to keep people in jobs.

He unveiled a package of measures that will include deferment of VAT for the quarter up to the end of June – injecting £30bn back into the economy – but will mean the closure of all restaurants, clubs, bars, cinemas and gyms.

Income tax payments due in July 2020 under the Self Assessment system will be deferred to January 2021, benefiting up to 5.7m self-employed businesses, but there was concern that the they were not included in the wage supplement measures.

Mr Sunak described his measures as “unprecedented in the history of the British state”.

He said: “The Government is going to step in and help pay people’s wages.

“We’re setting up a new coronavirus job retention scheme. Any employer in the country small or large, charitable or non-profit, will be eligible for the scheme.

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

“Government grants will cover 80% of the salary of retained workers up to a total of £2,500 a month – that’s just above the median income.” The payments will apply for three months backdated to 1 March.

Cash has already been made available and the loan scheme will be interest free for a year instead of six months.

There will be £7 billion of extra support through the welfare system.

The following businesses have been asked to close: 

  • Food and drink venues for consumption on-site, such as restaurants and cafes.   
  • Drinking establishments, including pubs, bars, nightclubs.  
  • Entertainment venues, including cinemas, theatres, concert halls, and bingo halls.  
  • Museums and galleries.  
  • Spas, wellness centres and massage parlours.  
  • Casinos and betting shops.   
  • All indoor leisure and sports facilities, including gyms. 

Emma McClarkin, CEO of the British Beer and Pub Association, said: “We stand ready to play our part in the fight against COVID-19 and in the process protecting our communities and employees. 

“As a sector employing nearly one million people, the Chancellor’s support package announced today on staff wages will safeguard thousands of livelihoods and help closed pubs try to get through this difficult period”. 

However, the package continued to prompt questions over what was missing, in particular more help for the self-employed.

IPSE (the Association of Independent Professionals and the Self-Employed), has warned that the government’s Coronavirus response measures leave the self-employed “trailing far behind employees”. 

It said that although there is unprecedented support for employees, the government has done “nowhere near enough” for the self-employed. It has urged the government to provide better support by creating a Temporary Income Protection Fund. This should provide temporary, targeted grants to replace a proportion of the income lost by freelancers.

Why have the self-employed been excluded from the commitment to pay 80% of earnings? 

– Mike Cherry, FSB

Federation of Small Businesses (FSB) National Chairman Mike Cherry said: “This Government has a long way to go to show it’s on the side of our five million-strong self-employed community.

“Over the coming days, we need to see the Chancellor map out how he will directly support the self-employed in the same way as he has committed to directly support employees.

“The question at this point is – with firms being force to close – why have the self-employed been excluded from the commitment to pay 80% of earnings? 

“It cannot be right that an employee currently earning £25,000 a year could access £20,000 per annum through the new job retention scheme, while someone who’s self-employed earning the same sum might only access around £5,000 worth of support.”

Andy Sanford, partner at Blick Rothenberg, said: “it is unclear how Zero hours contract employees will be covered by the proposed changes. More details are required for this vulnerable sector.”

Dame Carolyn Fairbairn, CBI Director-General, 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.”

Policies to limit the spread of coronavirus, including “social distancing”, would need to be in place for “at least most of a year” in order for hospitals to cope, according to official scientific advice to the government.

Documents, prepared by the Scientific Advisory Group for Emergencies (Sage), said alternating between more and less strict measures could “plausibly be effective at keeping the number of critical care cases within capacity”.

Prime Minister Boris Johnson yesterday said the tide would turn “within 12 weeks”.

The PM has urged struggling businesses to “stick by their employees, because we’re going all going to need them”.

Nicola Sturgeon: ‘business has a role to play’

In a briefing in Scotland today, First Minister Nicola Sturgeon said her government will be “expanding the pay system which helps those who become unemployed into alternative jobs” including into those sectors which are expanding, such as supermarkets.

“We will use government contracts to keep financial support flowing,” she said.

Ms Sturgeon said her government is helping business but adds that business “also has a role to play”.

She urged companies to “treat your workers fairly” by making sure they don’t have to come in if they can work from home.

“Let’s not look back in a few weeks and wish we had done more to protect ourselves,” she said.

Fiona Hyslop speaking

Fiona Hyslop: ‘more action required’ (pic: Terry Murden)

Commenting after Mr Sunak’s announcement, Fiona Hyslop, the Scottish Economy Secretary called on big businesses who have laid off staff because of the crisis to reconsider their decisions in light of the new wage support package.

She said: “The scale of these measures is unprecedented, but more action will be required to support the self-employed and unemployed who will not see the benefit of these actions.

“We also need to see action on sick pay to ensure that where people follow the essential health advice, they know they will be supported in doing so.”  

The latest developments come after the Bank of England announced a second interest rate cut and a further injection of bonds into the economy.

The markets responded positively to the stimulus package, with the FTSE closing higher.

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