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Rishi Sunak Is Boosting The Furlough Replacement Scheme And Offering New Cash Grants After A Backlash From Firms In Tier 2 Lockdowns

Rishi Sunak outlined his changed to the job support scheme after meeting with hospitality businesses and union leaders this morning (PA)

4 min read

The Chancellor has unveiled a fresh financial rescue package with an increase in support for businesses in Tier 2 lockdowns.

In a statement to the Commons Rishi Sunak outlined a significant expansion of the furlough replacement scheme, as well as offering cash payments for firms in areas under increased restrictions.

The grants, which could be worth more than £1billion, will also be backdated so companies can claim for the whole time they have been affected by local lockdowns.

Mr Sunak’s announcement about changes to the job support scheme comes just over a week before it is due to launch, less than a month since he set out his Winter Economic Plan, and reflects the vast increase in regions placed under higher measures to reduce the spread of Covid-19.

He told MPs there are three strands to his update: “First, I'm introducing a new grant scheme for businesses impacted by Tier 2 restrictions, even if they aren't legally closed.We will fund local authorities to provide businesses in their area with direct cash grants.

“It will be up to local authorities to decide how best to distribute these grants, giving them the necessary flexibility to respond to local economic circumstances, but I'm providing enough funding to give every business premises in the hospitality and leisure and accommodation sectors, a direct grant worth up to £2,100 for every month Tier 2 restrictions applied.”

He added: “And crucially, I am pleased to confirm these grants will be retrospective. Businesses in any area which has been under enhanced restrictions can backdate their grants to August.”

The second aspect, he said, was about “making the job support scheme more generous for employers” after it was now clear the impact of restrictions on the hospitality sector “is more significant than they had hoped”.

“First under the original scheme employees had to work for 33% of their normal hours. Now, we will ask them to work only 20% of those hours,” he explained.

“Second, the employer contribution for the hours not worked will not be 33% as originally planned, or even 20%, as it is in the October furlough scheme, it will reduce to 5%. 

“And the scheme will apply to eligible businesses in all alert levels. So businesses that are not closed, but face higher restrictions in places like Liverpool, Lancashire South Yorkshire or Greater Manchester, as well as the devolved nations will be able to access greater support.”

The third strand will increase the government’s contribution to the incomes of the self employed by doubling the next round of support from 20% to 40%, to a maximum grant of £3,750.

This will amount to a potential further £3.1billion of support for those workers through November to January, with a further grant to follow covering February to April.

Mr Sunak finished by saying:  “This is our plan. A plan for jobs, for businesses, for the regions, for the economy, for the country, a plan to support the British people.”

But Labour’s shadow chancellor Anneliese Dodds accused him of “inaction" and called on him to “apologise to those who have already lost their jobs, seen their businesses slip through their fingers in those areas which have not had that support until now”.

She told the Commons: "For months we have urged the Chancellor to get ahead of the looming unemployment crisis and act to save jobs.

"Instead, we've had a patchwork of poor ideas rushed out at the last minute."

And the mayor of Greater Manchester Andy Burnham tweeted: “Honestly, can barely believe what I’m reading here. Why on earth was this not put on the table on Tuesday to reach an agreement with us?

“I said directly to the Prime Minister that a deal was there to be done if it took into account the effects on Greater Manchester businesses of three months in Tier 2.”

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