FOR THE FIRST TIME ever, the government is going to step in and help to pay people’s wages, Chancellor Rishi Sunak has announced.
Called the Coronavirus Job Retention Scheme, all employers will be able to contact HMRC for a grant to cover most of the wages of people who are not working but are furloughed and kept on payroll, rather than being laid off.
Government grants will cover 80% of the salary of retained workers up to a total of £2,500 a month.
Employers can top up salaries further if they choose to.
Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme will cover the cost of wages backdated to 1 March and will operate for at least three months. The Chancellor has promised to extend the scheme for longer if necessary.
The first grants will start to be paid within weeks and before the end of April.
Rishi Sunak thanked the Trades Union Congress, the CBI and other business groups, for “constructive conversations” that contributed to the design of the scheme.
The interest free period operating for the Coronavirus Business Interruption Loan Scheme will now be extended to twelve months.
The loans will be available from Monday, 23 March 2020.
Further measures will be taken next week for larger and medium sized companies to access credit.
In addition, the next quarter of VAT payments is being deferred until the end of June and payment can be extended until the end of the financial year.
The move represents an injection of £30bn to employers, equivalent to 1.5% of GDP.
In a direct plea to businesses, Rishi Sunak said, “I know its tough out there.
“The Government is doing its best to stand behind you – and I am asking you to do your best, to stand behind our workers.
“We’re launching in the coming days a major national advertising campaign to communicate the available support for businesses and people. Please look very carefully at that support before making decisions to lay people off.”
In other measures, Universal Credit standard allowance rises for the next 12 months, by £1,000 a year and Working Tax Credit basic element by the same amount.
The Chancellor also announced he is suspending the minimum income floor for everyone affected by the economic impacts of coronavirus.
Self-employed person will now be able to access Universal Credit at a rate equivalent to Statutory Sick Pay for employees.
In addition, tax payments are being postponed, with the next self-assessment payments now deferred until January 2021.
Closing his speech, Rushi Sunak said, “Now, more than any time in our recent history, we will be judged by our capacity for compassion.
“Our ability to come through this, won’t just be down to what government or business can do, but by the individual acts of kindness we show one another.
“The small business who does everything they can not to lay off their staff. The student who does a shop for their elderly neighbour. The retired nurse who volunteers to cover some shifts in their local hospital.
“When this is over, and it will be over, we want to look back at this moment and remember the many small acts of kindness done by us and to us.”