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Chancellor Rishi Sunak is preparing to liquidate the coronavirus wage subsidy scheme for workers starting in July as part of the government’s plans to phase out blockade measures.
In a sign of rising treasury costs with nearly a quarter of Britain’s employees suspended in the past two weeks, the chancellor is expected to announce that the Covid-19 job retention scheme will steadily shrink as it grows. lift restrictions on commercial activity. .
The Treasury is understood to be examining several options to reduce the scheme, including reducing the state-paid wage subsidy from 80% to 60% and lowering the £ 2,500 limit on monthly payments. Another option promoted by employer groups to allow laid-off staff to work is also being considered, but with a smaller state subsidy.
Sources indicated that a final decision has yet to be made, but the Treasury was working closely with No. 10 as Boris Johnson prepares to outline plans on Sunday to gradually lift the blockade restrictions. After more than a month of tight controls on business and social activity in Britain and in other countries around the world, the UK is on the brink of the deepest recession in memory.
Sunak is expected to announce the details of the plan before mid-May, because employers with more than 100 employees must complete a 45-day consultation before making any layoffs. With the licensing plan closing in late June, companies will need to start making decisions starting next week, pressuring the chancellor to provide renewed guidelines or face a wave of potential job losses.
Employer groups have asked the chancellor to make urgent changes to the scheme to eliminate the risk of a “cliff” closure to the wage subsidy program in late June, warning that it otherwise risks becoming a “room waiting “for layoffs.
Sunak used a television interview on Monday to promise there would be no edge of the cliff. He told ITV: “I am working, as we speak, to discover the most effective way to reduce the scheme and make it easier for people to return to work in a measured way.”
Figures released this week by HMRC showed that a total of 6.3 million jobs have been temporarily laid off by 800,000 companies, as companies across the country flock to take advantage of the labor subsidy scheme.
Launched on April 20, the program involves the Treasury paying 80% of workers’ wages up to a maximum of £ 2,500 per month to avoid being fired by their employers.
Given the rapid implementation of the scheme, the costs for the public portfolio have steadily increased by billions. HMRC said the total value of the claims so far amounted to £ 8 billion by May 3.
The government’s tax and spending watchdog, the Office of Budgetary Responsibility, has estimated that the plan could cost £ 42 billion in three months if a total of 8.3 million people are laid off with an 80% subsidy . It could cost an additional £ 12 billion for each additional month at this level, according to the Resolution Foundation.
