UK to pay two-thirds of wages in firms forced to close by Covid-19

British Chancellor of the Exchequer Rishi Sunak during a virtual news conference in Downing Street, London, after he presented his Winter Economy Plan to MPs in the House of Commons.

UK Chancellor of the Exchequer Rishi Sunak announced new support for jobs in coronavirus hot spots, as tougher restrictions are readied to try to contain a pandemic the government warned is “getting out of control”.

Under Mr Sunak’s plans, the UK government will pay two-thirds of the wages of workers in companies forced to close as a result of virus restrictions, and will also offer increased cash grants while they are shuttered.

The extra support, which Treasury officials said will amount to hundreds of millions of pounds a month, comes before new curbs next week which could involve shutting bars and restaurants in areas of England where the disease is spreading most rapidly.

The new plan comes just days after Mr Sunak opted to end the blanket aid for jobs under his original programme, in favour of a policy that only helped support part-time work in “viable” roles.

While that was an attempt to curb the unprecedented cost of the plan, economists warned it could see unemployment spike beyond 3 million people. At the time Mr Sunak said he couldn’t support every job, but the resurgence of coronavirus has forced him into more action.

UK faces an unbelievably serious situation with the pandemic getting out of control

Starting on November 1 and lasting six months, firms closed by any curbs will only have to cover tax contributions for employees that aren’t working —  equating to about 5% of their wages.

While that’s a better deal than the 55% they were due to pay for staff fulfilling just a third of their normal hours under the previous proposals, workers themselves will see their overall pay drop to 66% of normal, from 77% under the previous plan.

Companies will also receive larger grants if they are forced to closed, with the biggest receiving as much as £3,000 (€3,298) a month.

Balancing health and economic policy in the UK is becoming ever more difficult, with Public Health England warning the country faces a “definite and sustained” rise in infections.

General view of Shaftesbury Avenue, London, at around the usual opening time for west end shows.

The UK faces an “unbelievably serious situation” with the pandemic “getting out of control,” skills minister Gillian Keegan has said. 

The UK Office for National Statistics said the infection rate almost doubled in the week through October, with an estimated 17,200 new cases each day. The highest rates are in northern England, which is expected to be the focus of new restrictions brought in by Prime Minister Boris Johnson’s team next week.

Another study, conducted by Imperial College, London, found 1 in 170 people in England had the virus between September 18 and October 5, with 45,000 new infections every day in the period. 

The report, based on tests of 175,000 volunteers, found an eight-fold increase in infections in people over the age of 65 compared with the previous period.

— Bloomberg