UK bolsters salary support for those hit by local lockdowns

Pan Pylas
Associated Press

London – The British government said Friday it will pay two thirds of the salaries of workers in companies that have to close as a result of new coronavirus restrictions widely expected to come into effect next week.

In a change of policy, Treasury chief Rishi Sunak has responded to calls from businesses, local leaders and unions to provide a financial support package to prevent mass job losses in sectors that will be subject to new restrictions.

People walk past a sign that refers to COVID-19 closures in London, Friday, Oct. 9, 2020.

Pubs and restaurants in large parts of the north of England, where the coronavirus is spreading fastest, are expected to face a government order to shut their doors again, barely three months after reopening from lockdown. Restrictions are already being tightened Friday in Scotland, where pubs in the two biggest cities, Glasgow and Edinburgh, have been ordered to close for 16 days.

“I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves,” Sunak said. “The expansion of the Job Support Scheme will provide a safety net for businesses across the U.K. who are required to temporarily close their doors, giving them the right support at the right time.”

Under the salary support program, the government will pay 67% of the salaries of workers who won’t be able to work, up to a maximum of 2,100 pounds ($2,730) a month. Employers will not be required to contribute towards wages.

Sunak said cash grants for businesses required to close will also be increased to up to 3,000 pounds per month.

Businesses will only be eligible to claim the grant while they are subject to restrictions and employees must be off work for a minimum of 7 consecutive days. The changes will take effect from Nov. 1 and will be available for six months, with a review in January.

The move comes ahead of a widely anticipated announcement in the coming days of further restrictions in virus hot spots around England, such as the big northern cities of Liverpool, Manchester and Newcastle.

Hundreds of thousands of jobs could be affected, particularly at pubs and restaurants, which the government’s chief medical officer says have been largely behind the recent spike in new coronavirus infections.

A more generous nationwide program will expire at the end of October. At the height of that program, the government paid 80% of the salaries of furloughed workers, keeping a lid on unemployment. That is being succeeded by the narrower Jobs Support Scheme, which will see the government pay up to 22% of wages for workers who return to work from their furlough from Nov. 1.

The new program announced Friday is a marked improvement on that.

“The Chancellor’s more generous job support for those under strict restrictions should cushion the blow for the most affected and keep more people in work,” said Carolyn Fairbairn, director general of the Confederation of British Industry.

“But many firms, including pubs and restaurants, will still be hugely disappointed if they have to close their doors again after doing so much to keep customers and staff safe.”

The sector had been emerging from the tumult of the lockdown and was the main motor of economic growth in August. New figures released Friday showed it was largely behind the 2.1% growth recorded from the previous month.

Many parts of England are seeing dramatic increases in virus infections, which has already led to tighter restrictions on businesses. Because the virus has been spreading at differing speeds, the government has opted to impose localized restrictions. But the differing rules have caused confusion.

The U.K. as a whole has suffered Europe’s deadliest outbreak, with over 42,600 deaths. The latest daily figures published Thursday showed 17,540 new cases, more than double the level from a week earlier. The number of people being hospitalized increased by 609 while the death toll rose by 77.

The British economy lost nearly a quarter of its output at the height of the lockdown in spring, when many sectors were closed and those people still working were encouraged to do so from home. Since May, when lockdown measures were eased, the economy has grown for four months, recovering much of the output lost. However, at the end of August the economy was still 9.2% smaller than before the pandemic.