Chancellor announces new package of measures to support workers and firms over winter

The resurgence of coronavirus poses a threat to the UK’s “fragile” economic recovery, Rishi Sunak warned as he confirmed plans for the state to top up the wages of workers forced to cut their hours due to the pandemic.

As part of a package of measures the Chancellor said the new jobs support scheme was aimed at protecting “viable” roles rather than all posts which have been kept going as a result of state support under the furlough programme.

Under the terms of the new scheme, the Government will top up the wages of people working at least a third of their normal hours.

They will be paid for that work as normal, with the state and employers then increasing those wages to cover two-thirds of the pay they have lost by working reduced hours.

He also extended the self-employment income support scheme and 15% VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.

Mr Sunak delivered his plans in the House of Commons, but Prime Minister Boris Johnson was not there to support him as he was visiting police recruits in Northamptonshire.

Downing Street denied speculation about a rift between at the top of Government, insisting there was “absolutely not” a problem between Mr Johnson and Mr Sunak.

The Chancellor told MPs: “The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery.”

And he acknowledged “we can’t save every business” and “we can’t save every job”.

The Chancellor warned that the economy may be permanently changed as a result of the pandemic.

He acknowledged that people were “anxious, afraid and exhausted” at the prospect of further restrictions but insisted there were reasons to be “cautiously optimistic” about the country’s ability to cope.

But he said that while in March it was hoped there would be a “temporary period of disruption” to the economy, it now appeared there would be a “more permanent adjustment”.

“The sources of our economic growth and the kinds of jobs we create will have to adapt to the new normal,” he said.

Measures announced by Mr Sunak included:

• The new job support scheme, which will be targeted at small and medium-sized firms, with larger companies only eligible if turnover has fallen due to the crisis.
• The existing self-employed grant will be extended on similar terms and conditions as the new job support scheme.
• The temporary 15% VAT cut for tourism and hospitality will be extended until the end of March.
• A new payment scheme will give more breathing space for more than £30 billion of deferred VAT payments, allowing them to make 11 interest-free payments in 2021-22 rather than a lump sum at the end of March.
• A “pay as you grow” measure will extend the repayment terms for bounceback loans from six to 10 years.
• Firms which have taken out coronavirus business interruption loans will see the Government guarantee extended for up to 10 years.
• All loan schemes will be extended until the end of the year.

Mr Sunak told MPs: “Today’s measures mark an important evolution in our approach, our lives can no longer be put on hold.”

With coronavirus set to be a part of people’s lives, they must “learn to live with it” and “live without fear”, he said.

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