Coronavirus: Chancellor to announce wage bailout plan
Rishi Sunak set to act after warnings that companies across Britain could face ruin
Chancellor Rishi Sunak is today expected to announce an employment and wage subsidy package in a bid to protect millions of jobs amid the coronavirus pandemic.
The government has held talks with business groups and union leaders, who urged Boris Johnson to help companies to pay wages amid the economic shock caused by the global outbreak.
“Negotiations went on into the night,” according to BBC economics editor Faisal Islam, with “many British companies see[ing] their cashflow dwindle because of the coronavirus and measures brought in to suppress it”.
Johnson has urged struggling businesses to “stick by their employees”, with the prime minister and Sunak expected to make an announcement about the wage rescue plan at this afternoon’s daily coronavirus briefing.
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The package had been due to be announced next week, but has been brought forward amid accusations by senior Tory MPs that the government’s existing measures are “simply not going to be enough”, according to The Times.
Conservative MP Greg Clark, a former business secretary, said yesterday that businesses can “see no choice but to lay off workers now”.
Clark added that many businesses are also rejecting the offer made earlier this week of government-backed loans because they “have no idea when they would be able to pay back the debt they would incur”.
Sir Bernard Jenkin, Conservative MP for Harwich and North Essex, echoed this, arguing that even traditional, small-state “diehards are lining up for far more radical measures”.
The Times claims that the wage annoucement could include cuts to employers’ national insurance and the basic rate of income tax and a plan to subsidise people’s wages.
A source told the paper that the government could in effect underwrite 60% of the average national wage for each worker. The plan was described by an official as an “entirely new approach” that would present “significant technical challenges”.
The BBC says the temporary support could be pegged to the 12-week period within which the prime minister yesterday said the country could “send the virus packing”.
After making another emergency rates cut yesterday, the Bank of England added to the pressure on the government when it said the measures announced by Chancellor Rishi Sunak were not going to be enough.
Sunak had earlier this week unveiled an “unprecedented” £330bn loan scheme to support businesses, alongside a raft of “direct support” measures including tax cuts, millions in grants and three month “mortgage holidays”.