Government pledges ‘unlimited’ salary support as sector begins first day of enforced lockdown

Rishi Sunak, Chancellor of the Exchequer 2

The Chancellor of the Exchequer yesterday confirmed government grants will cover 80% of the salary of retained workers – as Prime Minister Boris Johnson officially ordered a lockdown of all hospitality venues.  

Rishi Sunak said the grants will cover up to 80% of the salary of retained workers up to a total of £2,500 a month, though employers can top up salaries further if they choose.

The scheme will be backdated for wages from 1 March and will be open initially for at least three months, with Mr Sunak revealing there will be “no limit on the amount of funding” for the scheme.

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“HMRC are working night and day to get the scheme up and running, and we expect the first grants to be paid within weeks. We are aiming to get it done before the end of April,” he said.

However, for those businesses in difficulties now, the Chancellor expanded the previously announced coronavirus business interruption scheme, with its interest-free period extending from six to 12 months. These loans should now be available from Monday (23 March).

Sunak also bolstered business cashflow support through the tax system. The government is deferring the next quarter of VAT payments so that no business will pay any VAT until the end of June.

Companies will have until the end of the year to repay those bills. “That is a direct injection of over £30 billion of cash to businesses, equivalent to 1% of GDP,” the Chancellor said.

He urged to employers to “look to government” before laying workers off.

He also told businesses that VAT was suspended for the next quarter, with nothing due until June and giving until the end of the financial year to repay.

It comes as Boris Johnson told all pubs, bars and cafes to shut along with theatres, clubs, restaurants, leisure centres and gyms.

The intervention from the Chancellor is unprecedented in the history of Britain in a move which will see the government, as Mr Sunak put it, to “step in to pay people’s wages.”

All hospitality venues in the UK were told they must close from last night to stop the spread of coronavirus.

After several days of relative confusion, following Mr Johnson’s recommendation on Monday not to attend sites such as restaurants, cafes, pubs and clubs but leaving them short of closure, said in his daily briefing that he would be mandating that they shut their doors to the public.

However, he did enable foodservice venues to continue to provide a takeaway service.

Mr Johnson also reported that the government would review the situation each month to see if it can relax any of these measures.

His move should hopefully allow many venues to be able to claim on their insurance.

Despite the increase in measures put forward, the prime minister was positive in telling the public when discussing social distancing that “your sacrifice means we are putting the country in a better and stronger position and we will be able to save thousands of lives.”

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Andrew Seymour

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