Covid-19: Sunak is ready to reveal emergency works scheme

Chancellor Rishi Sunak will later unveil a plan aimed at minimizing further unemployment as tighter Covid-19 restrictions take effect.

The new measures are expected to replace the licensing plan, which will expire next month.

In July, around 5 million workers still received some or all of their income through the scheme, many in the hospitality sector.

Pubs and restaurants have warned that they will be hit hard by the new restrictions.

As of Thursday, hospitality venues in England are expected to close at 22:00 BST as the government tries to control the spread of the coronavirus.

Scotland is introducing similar measures, with pubs and restaurants due to close at 22:00 BST from Friday, while in Wales restrictions are limited to stopping the sale of alcohol at 22:00 from Thursday.

“Many companies will not survive this and we will see more and more people lose their jobs,” said Kate Nicholls, chief executive of trade body UKHospitality.

Around 12:30 p.m. the chancellor is expected to address the Commons to unveil plans the government hopes will curb job losses.

• The Covid crisis forces the elimination of the fall budget
• Could the UK adopt a licensing scheme in Germany or France?

It is understood that Mr. Sunak has been considering different forms of wage subsidy and will announce more financial assistance.

It is also believed that he is looking for options that include a salary recharge plan, similar to those already operating in France and Germany.

The prime minister said Sunak was working on “creative and imaginative” solutions.

Although the Treasury has declined to comment, possible ideas are believed to include allowing companies to cut employees’ hours while keeping them on a job, and allowing the government to pay part of the lost wages.

Sunak also announced Wednesday that the fall budget would be eliminated this year due to the pandemic.

Canceling the Budget is a big problem, because of what it shows about the general panorama: a government still in crisis mode, having to postpone difficult decisions in the medium term, about tax increases, which at least would have been pointed out in the contents of a Red Budget Box.

But we will get more expenses, more support for the works. As the Chancellor told me last week, that doesn’t mean extending the licensing plan endlessly, but he’s been thinking “creatively.”

Discussions with business groups and unions have focused on supporting employers with cash flow constraints to maintain viable jobs. The initial purpose of the leave plan was to support people’s salaries, expressly to keep them at home.

The new scheme is likely to be inspired by continental Europe, by subsidizing “short-time” work, that is, helping to complete pay for workers who have worked fewer hours during the crisis.

The licensing scheme is regularly praised by the prime minister, and it has undoubtedly been one of the most competently executed policy responses to the Covid crisis. Add in the fact that the Tory “red wall” is more comfortable with using state spending, and some conservative thinkers advocate a permanent wage support scheme, as is the case in Germany.

We also expect extensions for weeks or months of the different loan guarantee schemes offered by the Treasury. Banks are already worried about having to apply for some of these loans. Now, important sectors of the economy remain in the shadow of the pandemic and the continuous social restrictions designed to defeat it.

It’s hard to see how a complete spending review could happen over four years. The Treasury cannot calculate the size of the cake to be cut. Having a one-year review, like last year, also avoids some corrosive internal politics about winners and losers.

So more spending and more employment support, as infection rates rise, and restrictions seem likely to tighten rather than ease, but how everything will be paid for, in a time of high and growing public debt.

Loss of leave

The government has been under increasing pressure to extend or replace the licensing scheme, which will end next month.

The Coronavirus Job Retention Plan was introduced in March and paid 80% of salaries for licensed workers, up to a maximum of £ 2,500 per month.

Since then, employers have been asked to pay 10% of the salaries of those on leave, plus their National Insurance and pension contributions.

Unemployed workers can now also go back to part-time work and the government pays for the remaining hours not worked.

During the prime minister’s weekly questions on Wednesday, Boris Johnson faced calls from MPs on all sides to act swiftly to help businesses hardest hit by the new restrictions on leisure and economic activity.

Citing Whitbread’s announcement that it planned to cut up to 6,000 jobs in the UK, Labor leader Sir Keir Starmer said the threat to employment was “not theoretical”.

“The CBI, the TUC, the Federation of Small Businesses, the British Chamber of Commerce and the Governor of the Bank of England are calling on the prime minister to stop and reconsider and not withdraw the license,” he said.

In a televised response to the prime minister’s broadcast on Tuesday, Sir Keir called for a “Plan B” for the economy, “because it makes no sense to introduce new restrictions while phasing out support for jobs and businesses.”

What are the possible options?

• Germany’s short-time job: The employer cuts workers’ working hours and the government pays them a percentage of the money they would have lost as a result. It’s a long-established scheme, but it has been revised during the pandemic. Now it can last up to 21 months and the percentage of lost wages paid by the government can now reach 80%.
• France’s “partial unemployment”: The French scheme, known as “partial unemployment” or “partial activity,” also predates the coronavirus pandemic. Companies can reduce employees’ working hours by up to 40% for up to three years. Employees still receive almost all of their normal salary, and the government pays a percentage of the cost.
• The CBI suggestion: A government pay supplement should be available as long as employees can work at least 50% of their normal hours. The company would pay the actual hours worked in full, but the employee would be paid for two-thirds of the hours lost, with the cost shared between the company and the Treasury. The subsidy would last up to one year.
• The TUC suggestion: A more generous version of the above. Employees could work a smaller proportion of their normal hours and remain eligible, while being guaranteed 80% pay for lost hours, or 100% if they have minimum wage.