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Mon, 6 April 2020

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Government to pay 80% of wages of employees not working as a result of coronavirus outbreak, Rishi Sunak announces

Government to pay 80% of wages of employees not working as a result of coronavirus outbreak, Rishi Sunak announces
4 min read

Government will pay most of the wages of employees not working as a result of the coronavirus outbreak, Rishi Sunak has announced.

In an unprecedented move, the Chancellor said 80% of their salary - up to £2,500 a month - will be covered by the state for at least the next three months.

Mr Sunak said the 'Coronavirus Job Retention Scheme' would be made available for staff who are currently not working as a result of the economic turmoil caused by the outbreak, but remain on their employers' payroll.

To help the thousands who have already lost their jobs since the outbreak began, Universal Credit and working tax credit payments will also increase by £1,000 a year for the next 12 months, the Chancellor said.

Self-employed people will also be able to claim in full Universal Credit at a rate equivalent to statutory sick pay, which is currently £94.25 a week.

He made the announcement as Boris Johnson confirmed that every pub, club, cinema, theatre, restaurant, gym and leisure centre will close indefinitely from Friday night.

Mr Sunak said: "To all those at home right now, anxious about the days ahead, I say this: you will not face this alone.

"But getting through this will require a collective national effort with a role for everyone to play. People, businesses, government. It’s on all of us."

On the salary package, which Mr Sunak said would be in place by the end of April, he said: "For the first time in our history, the Government is going to step in and help to pay people’s wages.

"We're setting up a new Coronavirus Job Retention Scheme. Any employer in the country, small or large, charitable or non-profit, will be eligible for this scheme. 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. That’s just above the median income. And of course employers can top up salaries further if they chose to."

The Chancellor said he was "placing no limit" on the amount of money available to fund the scheme.

"We said we would stand together with the British people and we meant it," Mr Sunak said.

He also said an interest-free loan scheme for businesses struggling because of the outbreak will be extended from six months to a year, while no business will have to pay any VAT before the end of June - a cash injection worth £30bn.

In a rallying cry to the nation, the Chancellor added: "Now more than at any time in our history we will be judged by our capacity for compassion.

"Our ability to come through this won’t just be down to what the Government or businesses do but by the individual acts of kindness that we show each other: 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 on this moment and remember the many small acts of kindness done by us and to us. We want to look back on this time and remember how we thought first of others and acted with decency.

"We want to look back on this time and remember how, in the face of a generation-definining moment, we undertook a collective national effort and we stood together. It’s on all of us."


But Shadow Chancellor John McDonnell said Mr Sunak had not gone far enough.

"He said whatever it takes - this isn’t whatever it takes," Mr McDonnell said.

"He hasn’t gone far enough and I’m worried about yet another delay in getting these benefits to people, getting the wages in people’s pockets.

"So as I say, he’s shifted, not far enough and not fast enough, but I’m hoping that over the next few days we’ll be able to improve on that when he comes to Parliament on Monday."

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