Government to pay two-thirds of workers' wages for businesses hit by lockdown

By James McAllister

- Last updated on GMT

Government to pay two-thirds of workers' wages for businesses hit by local lockdowns

Related tags: Furlough, Job Support Scheme, Coronavirus, lockdown

Rishi Sunak has announced that the Government will cover two-thirds of workers’ wages if their employer's business is forced to close as a result of local Coronavirus lockdown restrictions.

Described by the Chancellor as an 'expansion' of his Job Support Scheme (JSS) rather than an extension of the furlough or Job Retention Scheme (JRS), the new support will cover businesses that, as a result of restrictions set by one or more of the four governments in the UK, are legally required to close their premises.

This includes restaurants and hospitality businesses told to only operate on a collection or takeaway-only basis.

For employees to be eligible an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 23 September.

The Government will pay two thirds of each employee's salary (or 67%), up to a maximum of £2,100 a month.

Under the scheme, which will begin on 1 November and will be available for six months, employers will not be required to contribute towards wages and only asked to cover NICS and pension contributions.

In line with the rest of the JSS, payments to businesses will be made in arrears via a HMRC claims service that will be available from early December.

Additionally, the Government is also increasing the cash grants it is awarding businesses in England shut by local lockdowns.

These grants will be linked to rateable values, with up to £3,000 per month payable every two weeks, compared to the sum of up to £1,500 every three weeks that was available previously.

The devolved administrations in Scotland, Wales and Northern Ireland will benefit from a £1.3bn increase to their guaranteed funding for 2020-21 - allowing them to continue their response to Covid-19 including through similar measures if they wish.

"Throughout the crisis the driving force of our economic policy has not changed," says Sunak.

"I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves.

"The expansion of the Job Support Scheme will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time."

Responding to the announcement, UKHospitality welcomed the increase in grants for closed hospitality businesses, but repeated its calls for a much more comprehensive package of support for the whole sector to cover rent and other overheads to ease the strain on businesses.         

The trade body has previously warned that businesses facing restrictions such as a curfew, compounded by diminished consumer confidence, must have a bespoke scheme.

“Paying two-thirds of wages for employees in lockdown is a welcome step and it is encouraging to see that the Chancellor has introduced flexibility and a sector-specific approach into the JSS and recognises that this is an evolving situation," says UKHospitality chief executive Kate Nicholls.

"Support for nightclubs and other businesses left in limbo, still unable to reopen, is very welcome. It will help save jobs in a sector that would be sorely missed it were allowed to die.

“However, worryingly, it does nothing to address the issues faced by sector businesses operating well below capacity due to restrictions and consumers avoiding travel and struggling to keep their workforce employed.

“The curfew has been crippling for many hospitality businesses, with sales down around 30% even in areas of low infection. A more comprehensive support package for our businesses affected must follow swiftly if they are to survive the winter and avoid contributing to mass unemployment.

"If the Government is serious about saving jobs, it needs to rethink the mandatory curfew in areas where Covid rates are low.

“The need now is no less – possibly is even more – than the first lockdown, so a more comprehensive package of financial support is crucial. In addition to employment support that must include grants for businesses to cover losses on stock and other overheads, which are piling up.

"We have already seen some high-profile failures and the situation is becoming increasingly unsustainable. The financial support on offer must go further if tragic levels of closures and redundancies are to be averted.”

Related topics: Legislation

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