Rishi Sunak today unveiled another billion pound bailout package to keep the self-employed afloat and keep bars and restaurants, which lay off millions of workers, from lockdowns.
In a dramatic Commons statement, the Chancellor stepped up support for sectors such as the hospitality industry after a wave of anger over “loopholes” in his existing provision.
He said he had listened to industry leaders and realized that "open but difficult companies need further support".
"Their message was clear – the impact of health restrictions on their businesses is worse than hoped," he said.
Mr. Sunak admitted that he could not provide exact figures for the total bill because the systems were "demand-driven".
But it seems that today's announcements mean the government will spend £ 20 billion more over the next six months on just three flagship programs – more than £ 200 billion total to prop up the economy.
They will sound the alarm in the face of soaring spending after it is revealed the government has borrowed more than £ 1 billion every day to date during the pandemic.
The bold moves were welcomed by the companies, but Greater Manchester Andy Burnham raged that he would have agreed a tier three financial package this week if he had known they were coming.
If there are significant changes to the Job Support Scheme, the government will pay more of the reduced hour staff costs, with only a 5 percent contribution from employers to unemployed hours instead of 33 percent.
There will be a minimum of one day per week of 33 percent – lowering the threshold for classes to be a "viable" job. The new system is expected to cost £ 1 billion a month for every 2 million people who use it – that could be £ 12 billion over the next six months.
Companies in Tier Two high risk areas can receive grants of up to £ 2,100 per month. The move is backdated to fend off criticism from hotspots in the north that have been restricted for months.
Mr Sunak said 150,000 across England could benefit, with the cost potentially reaching £ 1.2 billion over the next six months. Additional money is given to Scotland, Wales and Northern Ireland for their own programs.
The package for self-employed is being expanded enormously. By April, the grants will increase from 20 percent to 40 percent of average profit – meaning the maximum quarterly payment is now £ 3,750. The cost through January is estimated at £ 3.1 billion, but could double by spring if the higher rate is maintained.
While businesses forced to close in the toughest Tier 3 areas have access to significant funding, less is available for high-risk Tier Two regions like London and Essex – despite the ban on mixing households in Indoor spaces mean that many of them are under pressure.
Tory MPs are increasingly alarmed about the loophole and warn that the crisis will continue well into next year. Shocking official figures today show that 17 percent of businesses in the lodging and catering industry are at “serious” risk of bankruptcy.
In a dramatic Commons statement, the Chancellor stepped up support for sectors such as the hospitality industry after a wave of anger over “loopholes” in his existing provision. Mr. Sunak (right) and Robert Jenrick (left) held a executive round table this morning ahead of the announcement
The new system means that overall workers could receive less than under the previous arrangements – but employers will make far fewer contributions. The employer's contribution is only 5 percent of the hours not worked, which could be just 4 percent of the previous total wage, as shown here
The government has spent huge sums on coronavirus response while tax revenues have declined
An additional £ 36.1 billion was borrowed in September – the third highest month on record and compared to just £ 7 billion a year ago – when tax revenues plummeted and the Treasury released bailouts
When the Chancellor poured more money into the struggling British plc:
- The talks to classify Nottinghamshire in the “very high risk” category are expected to close shortly.
- Boris Johnson tried to bypass Andy Burnham by offering £ 60million coronavirus aid directly to local councils in Greater Manchester.
- Economists warned that lockdowns were killing even more people than they "could possibly save";
- Labor's Angela Rayner apologized after calling a Tory MP "scum" during a Covid-19 debate.
- 191 more coronavirus deaths were reported yesterday, with daily cases hitting a record 26,688;
- Hospitals have increased the cancellation of routine surgeries and non-Covid appointments as the number of viruses has increased.
- Scotland Yard agreed to withdraw a letter asking pubs and restaurants to sniff out their customers.
- Prince William spoke of the "unimaginable challenges" cancer patients face due to the coronavirus.
- National debt has risen to its highest level in 60 years.
- An important report warned that Covid-19 cannot be used as an excuse for delaying welfare reform.
Speaking to MPs today, Mr. Sunak said there were "difficult days and weeks ahead".
"Let me first speak to the people in Liverpool, Lancashire, South Yorkshire and Greater Manchester and other areas who are moving into or already living under increased health restrictions," he said.
“I understand your frustration, people need to know that this is not forever. These are temporary restrictions to help control the spread of the virus.
“There are difficult days and weeks ahead, but we will do it together. People are not alone. We have an economic plan that protects the jobs and livelihoods of the British, wherever they live and whatever the situation. & # 39;
Mr. Sunak said, “I have always said that we need to be ready to adjust our financial support as the situation develops, and we do that today.
'These changes mean that our support will reach a lot more people and protect a lot more jobs.
“I know that many people are becoming concerned about themselves, their families and communities by introducing more restrictions.
"I hope the increased government support can be part of the country that unites in the coming months."
Mr. Sunak cemented his position as the leading hawk in the cabinet and attacked Labor's support for a "blunt" national "breaker" lockdown.
"Just like in this crisis, we will listen to people's concerns and respond when the situation calls for it," he said.
"And I don't apologize for reacting to changing circumstances and that's why we're moving on today."
He added, "The evidence is clear – a regional, tiered approach is the right way to control the spread of the virus."
How the government's new JSS regulations would collapse for a worker who normally has a full-time wage of £ 1,100 a month. They can also get a universal loan, depending on the circumstances
Meanwhile, Boris Johnson met Iraqi Prime Minister Mustafa Al-Kadhimi on Downing Street today
Today's figures from ONS indicate that almost a fifth of hotel companies are exposed to a “serious” risk of bankruptcy
Companies that have to close in the third stage, such as betting shops and soft play centers, can leave their employees with two-thirds of their wages.
But there has been an outcry from Tier Two hotel companies whose business models have been ruined by restrictions that mean people can no longer socialize indoors.
Tier 2 restrictions now apply to many of the most densely populated parts of the country, including London, Birmingham, York, Essex and the North East.
As part of the Jobs Support Scheme (JSS), which will be officially introduced from November 1, employee wages can be raised to 77 percent of normal wages.
The state and the employer each finance 50 percent of the cost of the hours not worked. However, critics have warned that the system does not provide companies with enough incentive to keep employees.
But Mr Sunak cut the cost of the employer's contribution and the state took more of the bill.
The Treasury Department has modeled a cost of £ 1 billion per month for every two million people in the system.
That would cost £ 6 billion over the next six months, although much of that money was already tied up.
However, the bill could go up dramatically as more people sign up.
Mr Sunak also increased the amount of profits covered by the upcoming Self Employment Grant from 20 percent to 40 percent, meaning the maximum grant will be increased from £ 1,875 to £ 3,750.
According to the Treasury, this means a further £ 3.1 billion in support for self-employed between November and January alone.
If the next grant for February through April is held at the higher rate, it would be roughly the same again.
Torsten Bell, General Manager of the Resolution Foundation think tank, said, “Rishi Sunak has now created a functional part-time work schedule that companies can actually leverage. A guideline that can work in both the real world and spreadsheets.
“The Chancellor did absolutely the right thing today. Going earlier (given the obvious flaws) would have saved more jobs, but at least we are in the right place 10 days before the job support program goes into effect. & # 39;
Adam Marshall, director general of the UK chambers of commerce, said a number of the steps outlined by the chancellor responded directly to calls from chambers across the country.
"Retrospective grants for Tier 2 hotel businesses and increased grants for the self-employed will help ease pressure on many of those who have been particularly vulnerable to the economic impact of the pandemic," he said.
& # 39; The real test of these reforms will be whether they help local businesses weather the difficult months ahead.
"This is a very significant improvement in support for businesses grappling with the impact of increasing restrictions across the UK."
Frances O & # 39; Grady, Secretary General of the British Trades Union Congress (TUC) said: “Today’s action is progress, but there are still major gaps in the government’s plan.
“Low wage earners will face real difficulties when they are on less than 80% of their wages and support for the self-employed is still inadequate.
“The Chancellor should have increased support for all workers to at least 80%, and we still need adequate sick pay for people who are forced to self-isolate.
"As the public health crisis deepens across the country, we will continue to maintain pressure on the government to protect jobs and livelihoods, and we will continue to urge ministers into job creation, quality training and significant increases to invest. " to universal credit. & # 39;
Carolyn Fairbairn, Director General of the CBI said, “The Job Support Scheme will be a welcome and much-needed follow-up to the vacation program and will protect many livelihoods when it begins.
“It is absolutely right that companies contribute if they want to access this system. In a difficult winter, however, significantly higher government contributions to unemployment in all regions will do even more to protect people's livelihoods.
"The lack of the middle of tier 2 pubs, cafes and theaters where demand is fading but little additional support will be relieved when the anomaly ends."
Stephen Phipson, Managing Director of Make UK said: "The Chancellor has said he will work hard to protect jobs and today's statement is another important step, in particular to make the job support program much more accessible to employers . "
Jonathan Geldart, Director General of the Institute of Directors, said: “More help for the self-employed is another positive, but there is still a huge void.
& # 39; The exclusion of small business directors, who are an integral part of the dynamic entrepreneurial heart of our economy, from key support programs becomes all the more urgent as the virus spreads. It is deeply frustrating that this issue has still not been resolved. & # 39;
Mike Cherry, chairman of the Federation of Small Businesses, said, “At a time of immense struggle for many small businesses, these measures will help protect jobs, businesses and livelihoods.
"The Chancellor has shown her willingness to be flexible and adapt interventions if the second wave of the virus escalates."
New figures from the Treasury Department today show that companies raised around £ 4.6 billion in Covid-19 support loans last month.
The data shows that 6,509 companies borrowed £ 1.71 billion as part of the coronavirus business interruption loan between September 20 and October 18.
Meanwhile, 75,380 businesses have borrowed £ 2.18 under the bounce back credit system.
Around 57 companies have borrowed around £ 730m from the coronavirus loan program for large business disruption.
Pub and restaurant bosses today hailed Mr. Sunak's "new vacation program" to help those in the hospitality industry – as others warned, it will still be a tough winter for many.
The Chancellor has presented another rescue package to increase support for affected companies that suffer from tier two lockdown and self-employed.
As part of the job support program, the government will now pay a larger share of the staff costs for working time reductions, with only a five percent contribution from employers instead of 33 percent.
Companies in high-risk Tier Two areas can also receive grants of up to £ 2,100 per month to help fend off criticism from hotspots in the north that have been restricted for months.
Mr Sunak spoke in the House of Commons today that 150,000 businesses across England could benefit from the move, at a cost that could potentially reach £ 1 billion.
State support for the self-employed has also been increased. By April, the grants had increased from 20 percent to 40 percent of average profit – meaning the maximum quarterly payment is now £ 3,750.
Business leaders today hailed the recent bailout with Dame Carolyn Fairbairn, Director General of the Confederation of British Industries, calling the program "a welcome and much-needed successor to the vacation program".
Dame Carolyn said today: “It is right for companies to contribute if they want to access this system.
"But given a harsh winter, significantly higher government contributions to non-working hours in all regions will do even more to protect people's livelihoods."
Ms. Fairbairn said that "the lack of center of pubs, cafes and theaters in Tier 2 along with other businesses across the UK that are in decline but with little additional support will be relieved when this anomaly comes to an end".
"This is a big step towards a more standardized approach to supporting level two and three areas, as well as businesses that are at and within difficult times," she said.
While businesses forced to close in the toughest Tier 3 areas have access to significant funding, less is available for high-risk Tier Two regions like London and Essex – despite the ban on mixing households in Indoor spaces mean that many of them are under pressure.
Tory MPs are increasingly alarmed about the loophole and warn that the crisis will continue well into next year.
Shocking official figures also show that 17 percent of companies in the lodging and catering industry are at “serious” risk of bankruptcy.
Business leaders today hailed Mr. Sunak's bailout as "a very significant improvement in support for businesses grappling with the effects of increasing restrictions across the UK".
A spokesman for the UK Chambers of Commerce added: "The Chambers have been advocating increased support for companies experiencing a sharp fall in demand due to new restrictions, and a number of the steps announced today, including lowering employer contributions and the number of hours worked, to qualify for the program to respond directly to our calls.
"Retrospective second-tier hotel grants and improved self-employed grants will help ease pressure on many of those who have been particularly vulnerable to the economic impact of the pandemic."
Rebecca McDonald, Senior Economist at the Joseph Rowntree Foundation, said: "Holding back the coming wave of unemployment is not an easy task, and it is right that the Chancellor has taken steps to protect more jobs and address the shortcomings in the winter economic plan fix the grants and support for businesses, employees and self-employed.
“With four million workers in poverty before the coronavirus, we cannot expect people to stay afloat with an ever smaller fraction of their existing income if their costs have not changed.
“It is true that more support will now be available for people working in companies that are experiencing a loss of demand, not just for forced closings. However, this has to be enough for workers and their families to have a roof over their heads and food on the table through a very difficult winter. & # 39;
Paul Johnson, director of the Institute for Fiscal Studies, tweeted: 'Very big change to Job Support Scheme. To keep employees in jobs firms now need to pay 20 per cent for time they work plus five per cent on top, with government covering 75 per cent.
'Under scheme announced last month government covered just 45 per cent. This changes incentives to keep people on a lot.
'Again, though, it is very odd to have such a big announcement without, so far as I can see, any information on expected cost.'
Jonathan Geldart, director general of the Institute of Directors, also welcomed the scheme, adding: 'The new and improved jobs support scheme is to be welcomed, and should go some way to easing company directors' fears.
'A substantial reduction in the employer contribution is a crucial step, reflecting our members' concerns.
'Taking a national approach will help to cut through the confusion of different tiering systems and backroom political negotiations.'
However, others have warned the 'sad reality' is that thousands of businesses are likely to close over the winter 'whatever financial support packages the Chancellor offers up.'
Aude Barral, co-founder of developer recruitment platform CodinGame, added: 'The Government needs to recognise how important reskilling and retraining is going to be in helping the country get back on its feet as quickly as possible.
'The hospitality, tourism and retail sectors have been decimated by the pandemic, but there are sectors such as technology that have huge employment potential.
'There needs to be significantly more investment in retraining for the future, opening up these sectors to people who have transferable skills and are keen to get back to work.'
Other business owners agreed that the Government support is welcome, but insisted 'this isn't enough to help us if they still keep in place the same restrictions.'
Mark Dogan, 50, who runs Gizel kebab shop in Clapham, told MailOnline: 'Everyone having to leave pubs before 10pm means we get no business then. This isn't enough.
'And what are the details. Will they pay every week or only each month? So yes, I'll take it, but they're not doing enough to help.'
Malik Ahmed, a waiter at Argan restaurant by Clapham Common, was also critical of the new scheme, under which wages can be topped up to 77 per cent of the normal figure.
He said: 'We live in London, even with 100 percent of our wages we still can't cover all our bills.
'Now we are getting even less, so how am I going to afford rent, travel and all those other costs?
'This programme assumes that everyone has savings, but many don't. We are really struggling at the moment, business is dead because of all the restrictions.
'Look around, its lunch and there's hardly anyone here because customers are staying away. We need the restrictions gone now – we want to work hard and earn our full wages.'
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