As self-employed help awaited...
Taxpayers likely to take stakes in troubled airlines
Airlines are hoping for support
The UK government is planning to buy equity stakes in struggling airlines and other companies affected by the coronavirus pandemic.
Billions will be invested in companies such as IAG-owned British Airways in return for shares that would eventually be sold back to private investors, according to the Financial Times.
The move follows warnings that government support packages so far announced will not be enough to save companies from collapse.
Transport Minister Grant Shapps spoke to major airports and airlines on Wednesday about how the government could support the industry.
Gyms tycoon and former Dragons’ Den panelist Duncan Bannatyne recently criticised Virgin Atlantic’s owners for demanding government support, saying billionaires could support themselves.
Meantime, Stephen Barclay, Chief Secretary to the Treasury, offered no prospect of any immediate further action for five million self-employed workers concerned they were left exposed by yesterday’s package of support for workers.
Numerous groups have expressed alarm that the self-employed were not included in an agreement to pay up to 80% of wages, leaving many to live off state benefits.
Mr Barclay said in a radio interview that it was ‘operationally difficult’ but the government had taken targeted measures, helping the self-employed by deferring IR35 and the payment of tax.
There was also help with paying mortgages.
Cost of rescue deal
The Institute for Fiscal Studies (IFS) said the government’s rescue package will come with a price tag of £10bn over three months even if just 10% of employees were affected.
Mr Sunak vowed that the new ‘Coronavirus Job Retention Scheme’ would be made available for all firms who keep staff currently not working as a result of the economic turmoil caused by the outbreak on their payroll. HMRC will backdate pay to 1 March.
IFS director Paul Johnson said: “The cost of the wage subsidy package is unknowable at present but will run into several billion pounds per month that it is in operation.
Paul Johnson: ‘cost unknowable’ (pic: Terry Murden)
“Suppose 10% of employees are affected. That could cost the Government in the order of £10 billion over three months. If more take advantage of the support then the cost will be proportionally higher.”
The IFS also said the policy had been “designed in haste” and would need “considerable speed and flexibility from HMRC” in order to get it going.
Mr Johnson said: “As a result there are obvious concerns about its design. An employer with 10 employees might have enough work to keep them all occupied half time.
“This policy gives a very clear incentive to furlough half of them and keep half of them on full time.
‘There may also be concerns about policing this especially for owner managed companies paying wages to the owner.”