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Government to pay two-thirds of employee salaries at firms forced to shut by COVID restrictions

Written by on 9 October 2020

Workers at businesses forced to shut due to stricter lockdown measures will have two-thirds of their salaries paid by the government.

Chancellor Rishi Sunak unveiled the expansion of the Job Support Scheme, which is a successor to the furlough scheme, saying: “It 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 government will pay employees who cannot work 67% of their salaries, up to GBP2,100 a month.

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‘Hospitality is 30% of the infection rate’

The scheme will come into force on 1 November and run for six months before being reviewed. Employees must be off work for a minimum of seven days to be eligible.

The chancellor added: “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.”

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It comes amid speculation that England will be carved into three different lockdown tiers next week, with millions of people facing tougher restrictions – particularly in the north – as the government tries to handle rising coronavirus cases.

The new rules are likely to see pubs, cafes and restaurants effectively shut down in the worst-hit places, similar to what has happened in Scotland, where alcohol sales are being restricted for 16 days from today.

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Are more lockdown measures inevitable?

Anneliese Dodds, Labour’s shadow chancellor, said: “The fact the chancellor is having to tear up his Winter Economic Plan before the autumn is out demonstrates the chaos and incompetence at the heart of government. His delay in delivering support has caused unnecessary anxiety and job losses.

“Even at this late stage, he still has no plan to support sectors that are currently unable to operate at full capacity.

“None of this was inevitable if the chancellor had just taken his fingers out of ears and listened to the warnings from Labour and others.”

Confederation of British Industry director general Dame Carolyn Fairbairn said: “The chancellor’s more generous job support for those under strict restrictions should cushion the blow for the most affected and keep more people in work.

“But many firms, including pubs and restaurants, will still be hugely disappointed if they have to close their doors again after doing so much to keep customers and staff safe.”

Chancellor Rishi Sunak announced a national furlough scheme in March, shortly after the country went into lockdown, in an effort to limit the spread of COVID-19.

The scheme began to wind down in August – when the ONS estimated 12% of employees were still using it.

Also among the schemes designed to shield workers from unemployment was Eat Out To Help Out – a government subsidy encouraging people to dine out in August.

However, despite its popularity, it appears to have had a smaller effect on the economy than hoped – August’s GDP grew by just 2.1%, well off analysts’ forecasts of 4.6% and still 9.2% below its February level.