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What chancellor Rishi Sunak's latest announcements mean

Saleha Riaz
·3-min read
Britain's Chancellor of the Exchequer Rishi Sunak. Photo: Leon Neal/Pool via AP
Britain's Chancellor of the Exchequer Rishi Sunak. Photo: Leon Neal/Pool via AP

Chancellor Rishi Sunak announced fresh support for employees and businesses this week, ahead of tougher local lockdowns expected to be unveiled on Monday.

Sunak said his job support scheme, which was announced two weeks ago and replaces the government’s furlough scheme, would be expanded to offer targeted support to areas where businesses are ordered shut.

Staff unable to work will be able to claim wages from the government in a similar manner to the furlough scheme. The government will pay two-thirds of wages, up to a maximum of £2,100 ($2,740) per month.

The extension brings the scheme more in-line with the furlough programme, which is due to end this month.

The Treasury said the extension of the scheme meant employers caught in local lockdowns would not need to contribute to staff wages, although they will be required to continue to pay national insurance and make pension contributions.

He said: "Throughout the crisis the driving force of our economic policy has not changed.

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

However, some leaders and pub owners alike are unhappy with the level of support.

“£2,000 every four weeks isn’t going to cut it. Two-thirds of somebody’s wage isn’t going to cut it. You’ve got to remember that we’re in a trade where everyone’s on national minimum wage pretty much,” the BBC quoted Mel Green, manager of The Black Bull in Otley, West Yorkshire, as saying.

READ MORE: UK chancellor announces 'local furlough' scheme and business grants

In a statement to the publication, the mayors of Greater Manchester, North Tyne, Sheffield and Liverpool said more help was needed "to prevent genuine hardship, job losses and business failure this winter".

The government has said the new scheme is different from the furlough scheme, which will close at the end of October and offered to cover up to 80% of staff wages, up to a cap of £2,500 a month, and required financial contributions from businesses from July onwards. This was gradually reduced over the summer to 60%, with a cap of £1,875, from the start of this month.

An article in the Independent has pointed out that “the scheme is less generous than the original furlough, with a cap of £2,100 a month for each worker (versus £2,500 previously) and a requirement for larger employers to pay National Insurance and pension contributions. It will also be available only to firms forced to close, rather than being generally available.”

Meanwhile, businesses caught up in local lockdowns will be eligible for grants of up to £3,000 a month to make up for lost income.

The news comes as the government is expected to announce new measures to curb the spread of COVID-19 in the coming days. Downing Street will reportedly launch a “traffic light” system that could see all non-essential businesses forced to close in areas with the highest rates of infections.

The timing is not ideal for the UK economy, which is expected to stall in the coming months — and may even go into reverse — as it faces a triple threat of the COVID-19 second wave, the end of furlough, and Brexit.

Watch: How the UK government furlough scheme is changing