Rishi Sunak is unveiling an emergency Covid rescue plan to protect jobs that is expected to include wage subsidies, VAT cuts and more cheap loans for struggling businesses.
In a dramatic move, the chancellor has ruled out an autumn budget and instead will launch a “Winter Economy Plan” after MPs and unions warned of the risk of a “tsunami” of job losses.
The aim is to help the economy cope with the new coronavirus restrictions announced by Boris Johnson this week, including a 10 pm curfew for pubs and restaurants and ordering office staff to work from home.
And as the government prepared to launch its NHS Covid-19 App, the latest figures showed 6,178 new cases of coronavirus in the UK, taking the overall number to 409,729.
The NHS Covid-19 App has gone live today. It’s a useful way of helping you manage any exposure to the virus 🦠 in your day-to-day interactions. I’ve downloaded and if you can, I would suggest you do so too.https://t.co/QEBMledAYe— Harriett Baldwin MP #SociallyDistant (@hbaldwin) September 24, 2020
The centrepiece of the multi-billion-pound package is expected to be a scheme, modelled on one in Germany, in which taxpayers subsidise the wages of workers returning to work part time after being furloughed.
Other moves are likely to be extending a VAT cut to 5% for the lockdown-ravaged hospitality and tourism industries, which was introduced earlier this year, from next January until the end of March.
And four loan schemes for hard-hit businesses are likely to be extended until the end of November, with the terms increased from six to 10 years to reduce monthly repayments.
The chancellor has taken the highly unusual step of not having his November Budget because “now is not the right time to outline long-term plans and people want to see us focused on the here and now”, it was revealed.
Exclusive:— Steven Swinford (@Steven_Swinford) September 24, 2020
Rishi Sunak will extend VAT cut for hospitality and tourism until end of March
Coronavirus loan schemes extended until Nov, term of loans increased from 6 to 10 years
Wage subsidy scheme for part time working as furlough scheme endshttps://t.co/ZoT4tJ459y
A Treasury source said: “No-one wanted to be in this situation but we need to respond to it.
“The chancellor has shown he has been creative in the past and we hope that people will trust us to continue in that vein.
“Giving people reassurance and businesses the help they need to get through this is uppermost in his mind.”
According to the Treasury, the chancellor is promising a “flexible and adaptable approach to economic support, because people have needed the help and they’ve needed it quickly and at the right time”.
Allies said he would be “very honest with people” about the “difficult trade-offs” the government faces as it tries to deal with the twin challenges of rising infection rates and an economic slump.
“It is not about health versus the economy, but about the balance between keeping people in jobs and finding them new ones,” a source said.
“This is an ambitious Labour vision – where security and fairness aren’t just aspirations, but where they are a reality for families and communities across our country.”— Keir Starmer (@Keir_Starmer) September 21, 2020
– @AnnelieseDodds #Lab2020 https://t.co/w0m0e7fSMc
And the source added: “What remains true is that our priority is one word: jobs.”
Shadow chancellor Anneliese Dodds said that Labour has been “saying for a very long time that it’s critical we have a targeted system of wage support in place”.
Speaking to Kay Burley, she added: “I’ve called for that 40 times and 20 times the government has said they’re not willing to put that into place.
“Obviously, if the government has shifted, I’m pleased. It’s come very late, however.
“We’ve already seen a number of redundancies because of the one-size-fits-all withdrawal of the furlough scheme.”
Previewing the chancellor’s statement, the prime minister told MPs: “What we will do is continue to put our arms around the people of this country going through a very tough time and come up with the appropriate creative and imaginative schemes to keep them in work and keep the economy moving.”
That prompted the Labour MP Grahame Morris to demand a targeted expansion of a Covid job retention scheme and to tell Mr Johnson: “Make no mistake: a tsunami of job losses is in the pipeline within 38 days.”
Later, in a TV address responding to the PM’s broadcast 24 hours earlier, Labour leader Sir Keir Starmer urged the government to come up with a “plan B” for the economy ahead of the furlough scheme for workers ending in October.
“It makes no sense to bring in new restrictions at the same time as phasing out support for jobs and businesses,” he said, as he warned of a “wave of job losses this winter”.
The shop workers’ union also warned of “a tsunami of job losses” and called for an online sales tax to save the high street.
This year so far, 125,000 retail jobs have been lost and 14,000 shops have permanently closed. Usdaw supports a tripartite approach of retailers, unions and the Government, working together to develop a retail recovery plan to save our high streets. (5/6)— Paddy Lillis (@PaddyLillisGS) September 15, 2020
“If we are going to save the high street, there needs to be radical and bold action to level the playing field between online retail and ‘bricks and mortar’ shops,” said general secretary Paddy Lillis.
“The time is long overdue for the government to look seriously at introducing some form of online sales tax.
“As a society we have a choice, do we want to see the high street go to the wall or do we want to save it.
“Retail is the cornerstone of our towns, cities and communities. It employs around three million people and needs urgent assistance to get the industry back on its feet.”
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