Government to stump up 80% of workers’ wages

Rishi Sunak has announced that the government will pay the wages of workers across the UK in order to keep businesses afloat during the coronavirus crisis.

Announcing a series of “unprecedented” emergency measures, the chancellor of the exchequer (pictured) promised government grants to cover at least 80% of the salaries of employees at risk of losing their jobs because of the crisis – up to a total of £2,500 a month. 

He said: “For the first time in our country’s history, the government is going to step in and pay people’s wages.

“Any employer in the country, small or large, charitable or non-profit, will be eligible for the scheme.

“That means workers in any part of the UK can retain their job even if their employer can not afford to pay them.”

Sunak explained that the scheme, which will cover the cost of wages backdated to 1 March, will be open for at least three months and longer if necessary, with no funding limit.

“I can assure you that HMRC are working night and day to get the scheme up and running and we are expecting the first grants to be paid within weeks.”

Self-employed people will also receive support in the form of a suspension of the minimum income floor and a measure allowing them access to universal credit payments “at a rate equivalent to statutory sick pay for employees”.

And those filing self-assessment tax returns would have this summer’s on-account payment date pushed back to January next year.

Responding to criticism from some firms of the government’s £330bn rescue package announced on Tuesday, Sunak also extended the interest-free period of the coronavirus business interruption loan scheme from six to 12 months, with the first loans available from Monday.

He also said that all VAT payments for businesses would be deferred for the next quarter, with firms given until the end of the financial year to repay the bills.

The whole package of measures will be communicated to businesses via a “major national advertising campaign”.

Reacting to the announcements, Marc von Grundherr, director at estate agent Benham and Reeves, said the measures “provide a glimmer of hope for many independent agents and big corporates, in particular, taking a large proportion of the weight from their shoulders where staff cost is concerned”. 

He added: “The ability to defer their VAT bill until the end of the year will also be a huge help.”

Sunak’s measures drew a positive response from the industry. Hannah Vickers, chief executive of the Association for Consultancy and Engineering, said: “The chancellor’s interventions are unprecedented.

”Business leaders within our membership base, our industry and across the wider economy will breathe a sigh of relief to see significant support on wages, procurement process changes to ease cashflow pressure and delays to VAT.

”Taken together, these measures will ensure businesses can weather the storm of covid-19 and emerge fairly intact in the immediate term.”

RIBA chief executive Alan Vallance said: “We are encouraged by the financial measures announced this evening and hope they will provide much needed support for practices to retain staff and manage cash flow.”

The chancellor’s announcements followed a statement from Boris Johnson ordering all bars, nightclubs, theatres, gyms and leisure centres to close from tonight.

Johnson said the government was “telling” these outlets to close as soon as they reasonably could “and not to re-open tomorrow”.

The government plans to review the closure of leisure and hospitality businesses once a month, the prime minister added.