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Government to pay two-thirds of workers' wages for businesses closed by law

09 October 2020 by
Government to pay two-thirds of workers' wages for businesses closed by law

The government will pay two-thirds of workers' wages for businesses required to close their premises due to coronavirus restrictions, such as local or national lockdowns, chancellor Rishi Sunak has confirmed.

Where coronavirus restrictions legally require businesses to close in any region of the UK for at least one week or more, the government will cover businesses to pay two-thirds of their workers' salaries up to £2,100 a month. This includes businesses told to operate on a collection or takeaway-only basis. Closed businesses will be asked to pay national insurance and pension contributions.

The government is also increasing the cash grants to businesses in England shut in local lockdowns to help with fixed costs. These grants will be linked to rateable values, with up to £3,000 a month payable every two weeks.

The scheme will begin on 1 November and will be available for six months, to be reviewed in January. In line with the rest of the Job Support Scheme, payments to businesses will be made in arrears, via an HMRC claims service that will be available from early December.

This is an extension of the government's previously announced Job Support Scheme, designed to support businesses that are facing low demand over the winter months.

Sunak said: "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.

"The expansion of the Job Support Scheme 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 devolved administrations in Scotland, Wales and Northern Ireland will benefit from a £1.3b increase to their guaranteed funding for 2020-21, allowing them to continue their response to Covid-19, including through similar measures if they wish.

UKHospitality welcomed the increase in grants for closed hospitality businesses, but repeated its call for a more comprehensive package of support for the whole sector to cover rent and other overheads to ease the strain on businesses.

Chief executive Kate Nicholls said: "Paying two-thirds of wages for employees in lockdown is a welcome step and it is encouraging to see that the chancellor has introduced flexibility and a sector-specific approach into the JSS and recognises that this is an evolving situation. Support for nightclubs and other businesses left in limbo, still unable to reopen, is very welcome. It will help save jobs in a sector that would be sorely missed it were allowed to die.

"However, worryingly, it does nothing to address the issues faced by sector businesses operating well below capacity due to restrictions and consumers avoiding travel and struggling to keep their workforce employed.

"The curfew has been crippling for many hospitality businesses, with sales down around 30% even in areas of low infection. A more comprehensive support package for our businesses affected must follow swiftly if they are to survive the winter and avoid contributing to mass unemployment. If the government is serious about saving jobs, it needs to rethink the mandatory curfew in areas where Covid rates are low.

"The need now is no less – possibly is even more – than the first lockdown, so a more comprehensive package of financial support is crucial. In addition to employment support that must include grants for businesses to cover losses on stock and other overheads, which are piling up. We have already seen some high-profile failures and the situation is becoming increasingly unsustainable. The financial support on offer must go further if tragic levels of closures and redundancies are to be averted."

Joss Croft, chief executive of UKinbound, said: "Once again the chancellor has ignored the fact that inbound tourism businesses, that deliver £28b in export earnings for the UK every year, are on their knees, unable to fund viable jobs as they've been excluded from virtually all government support channels since March. Government has already stopped businesses trading due to measures such as quarantine and previous lockdowns, and it therefore needs to compensate all affected companies, not just those facing these new measures or with an obvious shop front."

Photo credit: Flickr / HM Treasury

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