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U.K. government prepares jobs support if firms forced to close

Expectation is that government will back targeted job-retention programs


October 9, 2020
By Pan Pylas/The Associated Press

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LONDON — The British government is on Friday set to announce further support for companies to retain staff in the coming months if they are forced to close as a result of new lockdown restrictions.

The government is likely to tighten restrictions on public life over the coming days in virus hot spots around England, such as the big northern cities of Liverpool, Manchester and Newcastle, and there are growing concerns the economy will take another hit. Hundreds of thousands of jobs could be affected, particularly at pubs and restaurants, which the government’s chief medical officer says have been largely behind the recent spike in new coronavirus infections.

As a result, businesses, local leaders and unions have joined forces to urge the government to ensure that any enforced business closures are accompanied by a financial support package to prevent mass unemployment.

Without revealing any details of what will be announced, Treasury chief Rishi Sunak said he understood how “people are worried about the coming winter months.”

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The expectation is that Sunak will back targeted job retention programs, whereby the government steps in to pay the majority of the salaries of workers who are forced to go idle.

Current program set to wrap up

A nationwide program that for months saw the government pay 80 per cent of the salaries of furloughed workers has helped keep a lid on unemployment but is ending at the end of October. That program will be replaced by the less generous Jobs Support Scheme, which will see the government pay up to 22 per cent of wages for workers who return to work from their furlough from Nov. 1.

“The Chancellor will be setting out the next stage of the Job Support Scheme later today that will protect jobs and provide a safety net for those businesses that may have to close in the coming weeks and months,” a Treasury spokesman said.

Many parts of England are seeing dramatic increases in virus infections, which has already led to tighter restrictions on businesses.

Because the virus has been accelerating at differing speeds, the government has opted to impose localized restrictions. But the differing rules have stoked confusion.

Restrictions are already being tightened on Friday in Scotland, where pubs in the two biggest cities, Glasgow and Edinburgh, have been ordered to close for 16 days.

42,600 deaths

The U.K. as a whole has seen Europe’s deadliest outbreak, with over 42,600 deaths. The latest daily figures published Thursday showed 17,540 new cases, more than double the level of the previous week. The number of people being hospitalized increased by 609 while the death toll rose by 77.

Any enforced closure of pubs and restaurants in parts of England will represent a bitter blow for the hospitality sector, which only reopened in early July following the shutdown that started on March 20.

The sector’s main lobby group has warned that well over 500,000 jobs could be lost by the end of the year as a result of new restrictions.

The sector had been emerging from the tumult of the lockdown and was the main motor of economic growth in August. New figures released Friday showed it was largely behind the 2.1 per cent growth recorded from the previous month.

The sector had been boosted by many people’s decision to take their holidays in the U.K. instead of going abroad, as well as a government dining discount scheme during the month. Under the Eat Out to Help Out program, sitting customers could receive a 50 per cent discount on food and non-alcoholic drinks at participating restaurants between Monday and Wednesday up to 10 pounds (US$13) per person.

The British economy lost nearly a quarter of its output at the height of the lockdown in spring, when many sectors were closed and those people still working were encouraged to do so from home. Since May, when lockdown measures were eased, the economy has grown for four months, recovering much of the output lost. However, at the end of August the economy was still 9.2 per cent smaller than before the pandemic.