Chancellor Rishi Sunak ‘could REVERSE UK taxes to subsidise wages’ in ‘unprecedented’ package of measures to weather the coronavirus crisis
- Rishi Sunak is expected to unveil a huge package of wage subsidies today
- It will help save stricken companies and employees amid coronavirus crisis
- Freezing income tax and National Insurance tax breaks are being considered
- Union urges Government to follow other countries’ lead in guaranteeing wages
- Coronavirus symptoms: what are they and should you see a doctor?
Workers in Britain could receive an emergency weekly wage subsidy in what would be the biggest state economic intervention since the Second World War.
Chancellor Rishi Sunak is expected to unveil a huge package of wage subsidies today to help save stricken companies and employees amid the coronavirus crisis.
Two of the measures being considered for subsidising wages during the pandemic are freezing income tax payments and giving National Insurance tax breaks.
Mr Sunak worked late into the night, with the Financial Times reporting that unions and business leaders expect him to unveil a huge package of wage subsidies.
The Daily Telegraph reported that Mr Sunak had held discussions over paying workers a weekly subsidy in an ‘unprecedented’ support for millions of employees.
Chancellor Rishi Sunak at 10 Downing Street in London yesterday as he plans a multi-billion pound package to help firms keep workers on their payrolls
It comes after leading trade union the GMB called on the Government yesterday to follow the lead of other countries in guaranteeing wages during the crisis.
Sweden, Germany and Austria are already subsidising a shorter working week, with governments halving the costs with employers so that workers keep 90 per cent of their wages, the union said.
Other measures have been put in place in countries such as France, Norway and Denmark to support wages.
GMB general secretary Tim Roache said: ‘Unless the Government urgently intervenes to underwrite wages, it risks turning a public health crisis into a new personal debt crisis for hundreds of thousands of families. We need a people’s bailout.
Prime Minister Boris Johnson gestures as he speaks during a coronavirus news conference at 10 Downing Street in London yesterday
‘Ministers must not allow workers and their families to go to the wall. Imagine being on the breadline, unable to work and being told that the light at the end of the tunnel is actually thousands more in debt to pay off. It’s just not right.
We can’t afford a loan so 40 drivers are going
Amber Cox is the manager of Dans Luxury Travel, Essex
A family-run coach firm has been forced to lay off all 40 drivers, and is days from going bust without an urgent Government cash injection.
Dans Luxury Travel, based in Waltham Abbey, Essex, was established almost 50 years ago.
The firm’s drivers regularly transport schoolchildren as well as running coach trips to the likes of Glastonbury Festival and the Chelsea Flower Show.
But the effect of the outbreak on schools and social gatherings has seen all of their bookings cancelled.
Manager Amber Cox, 28, said: ‘Without urgent money we will go bust within days. There has been a feeling of absolute devastation over the last three or four days.
‘We have had absolutely no choice but to let off all of our drivers. When I heard the Chancellor was making an announcement I thought we would be saved but now we’re days away from pulling the plug. The business rates relief doesn’t apply to us and the loans are going to take too long to come through. Plus, we won’t be in a position to repay large loans if we haven’t made money all summer. We need money now. Today.’
Miss Cox said some form of Government-backed salary cover or universal income would allow the company to keep hold of some staff and then take on new bookings in the autumn.
She added that, fortunately, some drivers have been taken on by a nearby lorry firm which is running supermarket deliveries.
Dans Luxury Travel was founded by Dan Brown, 70, in 1974, with one minibus.
It has transported the Liverpool football team as well as offering coach holidays for the elderly across the UK and Europe.
‘Huge numbers of people were covering basic living costs on credit even before this crisis struck. Suddenly finding income dry up is already pushing people to the financial brink.
‘Ministers need to guarantee wages and suspend rent and mortgage payments – not just roll them over to be paid later. This is crucial for living standards and people’s mental health now, but also for the hope of economic recovery later.
‘We are going to need people to spend in their local areas and if they’re paying off mountains of accumulated debt, they just won’t be able to do that.’
Mr Sunak’s multi-billion pound package to help firms keep workers on their payrolls comes after the Bank of England slashed interest rates to a record low.
In a dramatic move to keep the economy afloat, the Bank yesterday cut rates to an all-time low of just 0.1 per cent.
With huge numbers of firms on the brink and fears over thousands of jobs, it was the second emergency cut in just over a week.
Amid warnings that the UK is set to plunge into recession, the Bank’s new Governor Andrew Bailey said: ‘Things have happened in the past couple of weeks that none of us could have predicted.
‘The world has moved on at a frightening pace and we are responding to it. The time to act is now when we have the economic data.’
Mr Bailey also indicated that he and Mr Sunak had discussed a range of other emergency measures to help individual workers.
President Donald Trump has already announced plans to send cheques directly to Americans as part of a $1trillion (£852billion) support package.
Asked yesterday whether similar action could be taken in the UK, Mr Bailey said ‘nothing is off the table’.
Last night Boris Johnson said the Chancellor was going to make an announcement today on what was being done to support firms to keep workers employed and on their payrolls.
It is not yet known if this will be a US-style plan to give money directly to households or income support for firms to enable them to keep paying their staff rather than laying them off.
Mr Sunak has already announced £330billion in loans for firms and a business rates holiday for smaller companies to prop up the economy.
But the Government has conceded it will not be enough and will today pledge further measures so people do not lose their jobs.
Please cover staff salaries to save pubs
A pub landlord yesterday warned that if the Government doesn’t cover staff salaries, the consequences could be ‘worse than we ever imagined’.
Sean Hughes, 38, who runs three pubs in St Albans, Hertfordshire, said Chancellor Rishi Sunak’s measures to save the hospitality industry with grants of up to £25,000 and a business rates holiday were welcome, but more pressing action is needed.
Last orders: Sean Hughes, right, with his parents in St Albans, Hertfordshire
‘If we don’t get salaries covered I think there will be terrible consequences beyond what we ever imagined,’ he said. ‘The hospitality sector will be changed for ever.’
Mr Hughes, who employs 65 workers at his establishments including historic venue The Boot, said he hoped that – with savings – he will be able to hold on to staff for a maximum of eight weeks.
But he added: ‘With sales as they are, we can’t afford to stay open.’
Yesterday a Treasury source said: ‘The scale will match the problem so it will be big.’
Speaking last night, the Prime Minister urged companies to stand behind their workers and to ‘really think very carefully before you start laying off your staff’.
He said: ‘I say to business – stand by your employees, stand by your workers.’
It followed criticism from former Prime Minister Gordon Brown and Tory backbenchers that not enough was being done to reassure businesses who were letting staff go.
Mr Brown, who led the Labour Party in government during the 2008 financial crash, said the scale of the crisis now facing the country is ‘unprecedented’ as he called for international co-operation instead of ‘populist nationalism’.
He urged the Chancellor to do ‘considerably more’ to protect jobs, telling BBC Radio 4’s Today programme: ‘He says he’ll do more but the package should be out now to avoid redundancies being forced upon companies over the next day or two.
‘I think a lot of company directors will be looking at the moment to how many staff they are going to shed in the next few days, next few weeks.
‘And I think we need to step in now with building the confidence that we can keep people in work … and have an arrangement with people where they take some holidays but at the same time they are going to have income protection.’
John Redwood, a Thatcherite Tory MP, tweeted yesterday: ‘The Government needs to head off many redundancies by offering support to businesses hit by virus closures. Keep the workforces together for an early recovery.
Tim Roache (pictured in January), general secretary leading trade union the GMB, has urged the Government to follow the lead of other countries in guaranteeing wages during the crisis
‘It took ten years of hard work to create many jobs and record employment.
How cash is pouring in around the world
- Government-backed loans for small businesses, worth up to £256billion.
- Aid totalling £85billion, to include paid virus sick leave, free virus testing, paid leave to look after family and increased jobless benefits.
- Plan before Congress could also include up to £426billion in direct payments to all citizens and another £256billion in deferred tax.
- £504billion in Government-backed loans for businesses.
- Pledge that companies can defer tax payments.
- Compensation for workers who are sent home – similar to wage subsidies for 1.5million during the 2008 financial crisis.
- £275billion in state-guaranteed business loans.
- Unlimited support for businesses and workers, while £2billion earmarked for small restaurants and tourism firms.
- Tax payments delayed. Rent and utility bills to be suspended for smaller firms.
- ‘Sick leave’ payments for parents who stay home to look after their children because schools are closed.
- Loan guarantees for businesses as part of a £23billion rescue package.
- One-off payments of 500 euros each for the self-employed, freeze on any worker lay-offs and a cash bonus for those still working.
- Moratorium on loan and mortgage payments.
- State loan guarantees for businesses, worth £92billion.
- A £183billion spending package, including £550million to help the most vulnerable.
- Moratorium on mortgage payments and utility bills for anyone whose income has been hit by the crisis.
‘Don’t throw it away by allowing big redundancies when we hope the businesses will be needed again soon.’
Treasury minister John Glen also faced an angry backlash from Tory MPs during an urgent question in the House of Commons on employment support.
Greg Clark, the former business secretary who tabled the question, said the loan scheme announced on Tuesday was ‘not enough’ to prevent businesses laying off staff.
On the BBC’s Question Time last night, Health Secretary Matt Hancock admitted he could not live on statutory sick pay, but suggested an improvement could come with fresh measures to tackle the coronavirus crisis.
The Cabinet minister bluntly dismissed the prospect with a ‘no’ when he was asked if he could get by on the sum of £94.25 per week.
But he suggested more on the subject could come when Chancellor Rishi Sunak makes a further announcement on financial measures to tackle the economic fallout from the pandemic on Friday.
‘I’m not going to prejudge what the Chancellor’s going to say tomorrow, but all I can say is: mark my words, we will do everything we can to make sure people are supported through this,’ he said.
Mr Sunak was under increasing pressure to announce measures to support workers and renters after announcing Government-backed loans worth £330 billion to shore up companies.
The Government has already made sure sick payments are delivered to workers earlier, but the statuary sum has come under fresh scrutiny over whether it is sufficient.
There are fears workers may not self-isolate with Covid-19 symptoms to halt the spread because they do not want to take the financial blow of lost wages.
Yesterday the Bank of England took action to help the economy by cutting the base rate used to set the cost of mortgages and loans from 0.25 per cent, to just 0.1 per cent.
This is the lowest interest rates have been in the Bank’s 325-year history, reflecting the gigantic scale of the crisis.
Members of the Bank’s Monetary Policy Committee took the decision unanimously after an emergency meeting yesterday.
President Donald Trump (centre, in Washington DC today) has already announced plans to send cheques directly to Americans as part of a $1trillion (£852billion) support package
The Bank also revealed plans to pump £200billion into the economy via quantitative easing.
Competition rules are temporarily relaxed to allow UK supermarkets to collaborate to feed the country
Competition laws will be temporarily relaxed to allow supermarkets to collaborate in feeding the nation during the coronavirus crisis.
Retailers will be able to pool staff, share data on stock levels, and share distribution depots and delivery vans as the Government seeks to ease restrictions under the exceptional circumstances.
The temporary relaxation only permits retailers to work together for the sole purpose of feeding the nation as they face a strain from intense demand amid panic buying, ministers said.
The 5p plastic bag charge will also be waived for online purchases to hasten deliveries, and drivers’ hours will be relaxed so more food can be delivered to stores.
Environment Secretary George Eustice listened to the calls of retailers and confirmed elements of the law would be waived during a meeting with chief executives on Thursday.
‘We’ve listened to the powerful arguments of our leading supermarkets and will do whatever it takes to help them feed the nation,’ he said.
‘By relaxing elements of competition laws temporarily, our retailers can work together on their contingency plans and share the resources they need with each other during these unprecedented circumstances.
‘We welcome the measures supermarkets are already taking to keep shelves stocked and supply chains resilient, and will continue to support them with their response to coronavirus.’
The Government said legislation will shortly be laid in Parliament to amend parts of the Competition Act 1998, which prevents types of anti-competitive behaviour.
It stressed the economic shock caused by Covid-19 could be ‘sharp and large, but should be temporary’.
The rate cut should drive down the cost of borrowing for millions, including businesses and households whose finances have been hammered by the pandemic.
The boss of one property firm said the decision ‘sent the simple message to businesses and households ‘We’ve got your back’.
But it was described as ‘devastating news’ for savers. The rate cut comes just over a week after it was lowered from 0.75 per cent to 0.25 per cent.
Unite union assistant general secretary Steve Turner said: ‘The Government must ensure that UK manufacturing is primed to leap out of the gate once the shutdowns are over and the virus defeated.
‘Like France’s President Macron, the UK Government needs to commit that no otherwise viable business will collapse as a result of the coronavirus pandemic.
‘It should also go without saying that, with much of the industry shutting down, workers should not be left on reduced earnings, fearful of bills or bailiffs, shivering and struggling to cope.
‘Ministers must take direction from the likes of Austria, Germany, the Netherlands and many other European countries and introduce direct, in-your-pocket wage subsidies as a priority.
‘They must also go further than offering loan guarantees by providing interest-free grants and suspending business rates, VAT, corporation tax, National Insurance and other tax payments alongside utility standing charges for the duration of any closure.
‘It is also essential that businesses be allowed to temporarily ‘mothball’ as an alternative to closure and lay-off or liquidation, with essential workers retained at work in the business and the remainder put on to gardening leave, with employment contracts and service secured.
‘Now is the time for the Government to give industry and workers the resources and breathing space they need to meet the future with confidence.’
Wanted: Thousands of jobless to prop up food stores
Supermarkets announced yesterday that they were urgently recruiting thousands more staff to cope with unprecedented demand following the coronavirus outbreak.
While thousands of people in retailing, the hospitality industry and other sectors have been laid off, supermarkets are scrambling to hire workers to help stock shelves and deliver food to desperate customers.
Supermarket aisles have been stripped bare by shoppers panic buying at all the major stores as the crisis has deepened this week.
Empty shelves at a Morrisons supermarket this week in Whitley Bay, Tyne and Wear
Yesterday Morrisons, Iceland, Tesco, Lidl and the Co-op said they all needed to urgently hire both temporary and permanent staff if they were to meet demand.
The Co-op said 5,000 temporary and permanent roles were being created, while Morrisons announced it would be recruiting around 2,500 pickers and drivers, plus another 1,000 staff in its distribution centres.
Adverts for temporary stock assistant jobs, offering four-week contracts at Lidl stores in Bristol and elsewhere in the South West appeared on Facebook.
Meanwhile, cereal giant Kellogg’s said it too was looking for additional workers to increase production at its Manchester factory after sales of Corn Flakes, Crunchy Nut, Coco Pops and Rice Krispies surged.
Jo Whitfield, chief executive of Co-op Food, said it had simplified recruitment procedures so candidates could walk in and apply at their nearest store with a view to starting work in a matter of days.
‘Whilst our store and depot colleagues are working around the clock to ensure people have the essentials they need, we are all too aware that many people who work in bars, pubs and restaurants are out of work,’ she said.
Empty shelves in a Tesco Extra store in Worthing, West Sussex, yesterday afternoon
‘It makes perfect sense for us to try and temporarily absorb part of this skilled and talented workforce who are so adept at delivering great customer service, as we work together to feed the nation.
‘To anyone in this position who is looking for a job in one of our stores, our message is simple: please get in touch.’
The extra recruitment comes with a wave of measures including closing 24-hour stores overnight to re-stock shelves, limiting quantities of some or all items sold to each customer and introducing hours where only the vulnerable can shop.
David Potts, chief executive of Morrisons, added: ‘These measures will support our hard-working colleagues, enable us to provide more food to more people in their homes and create opportunities for people whose jobs are affected by the coronavirus.’
Supermarkets have seen a huge rise in demand for delivery services, with no online slots available for weeks at all the major chains.
Ocado said it had suspended taking orders for ‘a few days’ in order to recode its website to cope with panic buying. The online supermarket said it had processed 100 times its normal transaction levels.
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