Treasury boosts job support amid new Covid restrictions – but scheme less generous than furlough

Sunak says expanded programme ‘will provide a safety net for businesses required to temporarily close their doors’

By Richard Johnstone

11 Oct 2020

The Treasury will pay two-thirds of employees' salaries if their business is forced to close due to local or national coronavirus restrictions, in the latest phase of the government’s economic support package.

Under plans announced by the chancellor Rishi Sunak on Friday, employers will only have to cover the National Insurance and pension contributions of their staff, and can claim up to £2,100 a month for each person on their payroll.

The announcement comes ahead of an announcement today by the prime minister Boris Johnson today of a new three-tier risk system for England. Under the plans, places will be placed in classifications of "medium", "high" or "very high" alert.

Areas with fewer than 100 cases per 100,000 are understood to fall under tier one, medium alert, and will be required to follow national restrictions such as the "rule of six". High-alert areas with infection rates above 100 per 100,000 will be subject to stricter rules such as bans on household mixing.

Tier-three areas – those with significantly higher levels of infection – will likely face full lockdowns, with only supermarkets, schools and other essential businesses allowed to stay open.

It is expected that the Liverpool city region will be placed in tier 3, which could lead to the closure of pubs and restaurants.

In a letter to local leaders seen by CSW’s sister title PoliticsHome, the prime minister’s senior adviser Sir Edward Lister said: "The rising incidence in parts of the country mean that it is very likely that certain local areas will face further restrictions.

"Given the significant implications for these areas, and noting the vital contribution of local leaders and public health officials to the local response thus far, the prime minister is clear that local leaders should be able to help shape the package of measures in the most concerning areas."

Lister said Downing Street would engage with local authority leaders over the weekend and discuss a "set of measures".

"All of which present difficult choices," he said.

The new financial support is expected to come into force in mid-October, while the fresh support announced by the government will become available to businesses once the Job Support Scheme begins on 1 November.

The JSS – which succeeds the government’s Coronavirus Job Retention furlough scheme – will run for six months pending a review in January, and firms that have been forced to close prior to the start date can still claim the two-thirds of their employees' salary.

The expansion of the job support scheme, which Sunak first announced last month, remains less generous than the furlough scheme, which covered 80% of wages up to £2,500 in its initial phase in April. Additional employee contributions have been required since August.

Announcing the plans, Sunak 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.

“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.”

The Treasury said today’s announcement “comes alongside intensive engagement with local leaders today on potential measures are coming in their areas”.

Additional reporting by Eleanor Langford and Kate Proctor of CSW's sister title PoliticsHome, where a version of this article first appeared.

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