UK. extends wage support scheme until March '21 amid new lockdown
USA STILL HAS NO STIMULUS PACKAGE
England begins 4-week lockdown in bid to slow spread of COVID-19
A man passes a closed restaurant in central London as England enters a second coronavirus lockdown on Thursday. (Nikas Halle'n/AFP/Getty Images)
The Associated Press · Posted: Nov 05, 2020
The Associated Press · Posted: Nov 05, 2020
The British government and the Bank of England joined forces Thursday to provide further support to an economy that is set for a difficult winter following the imposition of new coronavirus lockdown measures.
Hours after the central bank increased its monetary stimulus by a bigger-than-anticipated £150 billion (roughly $256 billion Cdn), Treasury chief Rishi Sunak said the government's salary support program will be extended through March.
The extension of the program, which sees the government pay 80 per cent of the wages of people retained by firms rather than made redundant, comes on the day that England is back in lockdown and the other nations of the U.K. — Scotland, Wales and Northern Ireland — are living under heightened restrictions.
Like other nations in Europe, the U.K. has seen a sharp spike in new cases in recent weeks and on Wednesday recorded another 492 virus-related deaths, the highest daily number since May. Overall, it has Europe's highest official COVID-19 death toll at 47,742.
The Job Retention Scheme, which was introduced alongside the national lockdown in March and helped keep a lid on unemployment, was due to expire at the end of October and to be replaced by a less-generous program.
A worker shuts the doors in a bar in Bristol city centre ahead of England's lockdown. (Ben Birchall/PA/The Associated Press)
However, it was reinstated on Saturday when the government abruptly announced another lockdown for England to last until Dec. 2. The lockdown, which formally came into force on Thursday, will see millions of workers going idle once again as it requires all non-essential venues such as pubs, restaurants, and stores selling items like books, clothing and sneakers, to close. The support package for self-employed workers was also made more generous.
"I've always said I would do whatever it takes to protect jobs and livelihoods across the U.K. and that has meant adapting our support as the path of the virus has changed," Sunak told lawmakers.
However, it was reinstated on Saturday when the government abruptly announced another lockdown for England to last until Dec. 2. The lockdown, which formally came into force on Thursday, will see millions of workers going idle once again as it requires all non-essential venues such as pubs, restaurants, and stores selling items like books, clothing and sneakers, to close. The support package for self-employed workers was also made more generous.
"I've always said I would do whatever it takes to protect jobs and livelihoods across the U.K. and that has meant adapting our support as the path of the virus has changed," Sunak told lawmakers.
"It's clear the economic effects are much longer lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support."
The government had for months balked at calls for an extension, arguing it wasn't its role to support every job in the economy forever. It was no doubt also concerned about the cost of the program.
While welcoming the move, the main opposition Labour Party criticized Sunak for failing to act sooner, a delay that it said generated uncertainty and prompted some firms to dismiss staff in recent weeks. The government said the furlough scheme could be backdated so anyone who was on a payroll on Sept. 23 but then made redundant can be re-employed.
"This cycle of bluster, denial and then running to catch up is costing jobs and causing chaos," said Labour's economy spokesperson Anneliese Dodds.
The Bank of England warned that the British economy is set for another downturn in the winter but laid out the hope that a recession — widely defined as two straight quarters of contraction — may be avoided. It said the outlook for the economy remains "unusually uncertain."
The latest restrictions will weigh on an economy that had been recovering from the sharp recession caused by the spring lockdown. During the earlier lockdown, the British economy contracted by around a quarter. It recouped some of that during the summer, though the bank said it was still nine per cent smaller than its pre-COVID level at the end of the third quarter.
In a set of new forecasts, the central bank said it now expects that recovery to end and the economy to shrink two per cent in the fourth quarter before rebounding at the beginning of 2021 — assuming the restrictions start to be lifted. As a result of the latest contraction, it now doesn't expect the British economy to reach its pre-COVID level until the first quarter of 2022.
The central bank's increase in the bond-buying program was bigger than the £100 billion (roughly $171 billion Cdn) anticipated in financial markets and is aimed at keeping borrowing rates low to boost lending and ensuring that money keeps flowing through the financial system.
An NHS worker speaks with soldiers as they carry supplies at Pontin's Southport Holiday Park, north of Liverpool, on Thursday prior to assisting in a mass and rapid testing pilot scheme for the novel coronavirus. (Oli Scarff/AFP/Getty Images)
"We believe there is value in acting quickly and strongly to support the economy and avoid the risks of any short-term disruption," bank governor Andrew Bailey told reporters.
The nine-member monetary policy committee, which also unanimously kept its main interest rate at the record low of 0.1 per cent, welcomed the decision by the government to extend the salary support program.
Although the program prevented mass unemployment this year, the jobless rate has edged up from a four-decade low of 3.8 per cent to 4.5 per cent, with the likes of British Airways, Royal Mail and Rolls-Royce all laying off thousands.
On Thursday, supermarket chain Sainsbury's became the latest big company to announce hefty cuts. It said it will shed around 3,500 jobs as part of plans to permanently close its meat, fish and deli counters, as well as some of its Argos standalone stores.
Given the outlook, the Bank of England expects the unemployment rate to rise to a peak of 7.75 per cent in the second quarter of next year.
UK chancellor extends furlough till March and hands self-employed new lifeline
Tom Belger
·Finance and policy reporter
Thu, 5 November 2020
READ MORE: Bank of England to pump another £150bn ($194bn) into the UK economy
It marks a significant U-turn for the chancellor and prime minister Boris Johnson. Both had repeatedly declared it was time to move on from subsidising furloughed workers in struggling industries. They had already extended furlough by a month to December and agreed recently to make the replacement job support scheme more generous, but only in coronavirus hotspots and at 67% of previous pay.
But the second wave, tighter restrictions and pressure from business and union chiefs have forced a change in stance. Carolyn Fairbairn, director-general of the Confederation of British Industry (CBI), had said on Thursday an extension was the “right thing to do,” saying firms needed more certainty and stability to recover.
The chancellor had also faced heavy criticism from political leaders in Scotland, Wales, the North, and the Midlands for only extending furlough and making job support more generous when London and then England faced tighter curbs. Their areas faced restrictions with less aid for employers and jobs.
“I have had to make rapid adjustments to our economic plans as the spread of the virus has accelerated,” said Sunak in defence of the latest changes.
Sunak acknowledged the economic impact of the second England-wide lockdown coming into force on Thursday, after MPs backed a four-week shutdown in a vote on Wednesday.
Sunak told parliament that UK economic recovery was slowing, and the economic impact of England’s lockdown would outlast new restrictions. “Given this significant uncertainty, a worsening economic backdrop, and need to give people and businesses security through winter, I believe it is right to further.”
“Non-essential” shops, hospitality and leisure sites have been forced to close until 2 December. Economists and business groups expect this to take a heavy toll on firms and jobs. Different restrictions apply across the UK, set by devolved administrations.
It comes on the same day the Bank of England ramped up its support even further for the UK’s economy and the government’s finances. The central bank announced it would pump another £150bn ($194bn) into buying up government debt from investors, more than expected by analysts.
READ MORE: Sainsbury's warns 3,500 could lose jobs as it aims to shut 420 Argos stores
Official figures last month showed UK government debt is at its highest level in 60 years compared to the size of the economy. Borrowing has plugged the gap between soaring spending and declining tax receipts, and mass bond-buying by the central bank with newly created money has kept a lid on borrowing costs.
The Bank of England has been institutionally independent from central government for more than two decades, but Sunak said he and the bank’s governor Andrew Bailey were in “constant communication.” He said their measures were “carefully designed to complement each other.”
Tom Belger
·Finance and policy reporter
Thu, 5 November 2020
Britain's chancellor of the exchequer Rishi Sunak made another economic policy announcement on Thursday. Photo: John Sibley/Reuters
UK chancellor Rishi Sunak has caved into pressure to extend the furlough scheme once more, promising more generous support until next March for workers in struggling firms.
The finance minister made the latest in a string of recent announcements expanding job support in parliament on Thursday. He confirmed the government’s furlough scheme will continue beyond the current December cut-off across the UK, offering subsidies worth 80% of previous wages for workers on leave.
Employers will only have to pay insurance and pension contributions, with a review in January to see if they should contribute more. Plans for a bonus in February for employers keeping staff post-furlough have been delayed until “an appropriate time.”
The chancellor also announced the self-employed income support scheme (SEISS) would continue to pay 80% of average profits, rather than be cut as previously planned. Meanwhile Sunak promised another £2bn ($2.6bn) in general funding for the UK’s devolved administrations.
“People and business will want to know what comes next,” he told MPs. “They want certainty.”
UK chancellor Rishi Sunak has caved into pressure to extend the furlough scheme once more, promising more generous support until next March for workers in struggling firms.
The finance minister made the latest in a string of recent announcements expanding job support in parliament on Thursday. He confirmed the government’s furlough scheme will continue beyond the current December cut-off across the UK, offering subsidies worth 80% of previous wages for workers on leave.
Employers will only have to pay insurance and pension contributions, with a review in January to see if they should contribute more. Plans for a bonus in February for employers keeping staff post-furlough have been delayed until “an appropriate time.”
The chancellor also announced the self-employed income support scheme (SEISS) would continue to pay 80% of average profits, rather than be cut as previously planned. Meanwhile Sunak promised another £2bn ($2.6bn) in general funding for the UK’s devolved administrations.
“People and business will want to know what comes next,” he told MPs. “They want certainty.”
READ MORE: Bank of England to pump another £150bn ($194bn) into the UK economy
It marks a significant U-turn for the chancellor and prime minister Boris Johnson. Both had repeatedly declared it was time to move on from subsidising furloughed workers in struggling industries. They had already extended furlough by a month to December and agreed recently to make the replacement job support scheme more generous, but only in coronavirus hotspots and at 67% of previous pay.
But the second wave, tighter restrictions and pressure from business and union chiefs have forced a change in stance. Carolyn Fairbairn, director-general of the Confederation of British Industry (CBI), had said on Thursday an extension was the “right thing to do,” saying firms needed more certainty and stability to recover.
The chancellor had also faced heavy criticism from political leaders in Scotland, Wales, the North, and the Midlands for only extending furlough and making job support more generous when London and then England faced tighter curbs. Their areas faced restrictions with less aid for employers and jobs.
“I have had to make rapid adjustments to our economic plans as the spread of the virus has accelerated,” said Sunak in defence of the latest changes.
Sunak acknowledged the economic impact of the second England-wide lockdown coming into force on Thursday, after MPs backed a four-week shutdown in a vote on Wednesday.
Sunak told parliament that UK economic recovery was slowing, and the economic impact of England’s lockdown would outlast new restrictions. “Given this significant uncertainty, a worsening economic backdrop, and need to give people and businesses security through winter, I believe it is right to further.”
“Non-essential” shops, hospitality and leisure sites have been forced to close until 2 December. Economists and business groups expect this to take a heavy toll on firms and jobs. Different restrictions apply across the UK, set by devolved administrations.
It comes on the same day the Bank of England ramped up its support even further for the UK’s economy and the government’s finances. The central bank announced it would pump another £150bn ($194bn) into buying up government debt from investors, more than expected by analysts.
READ MORE: Sainsbury's warns 3,500 could lose jobs as it aims to shut 420 Argos stores
Official figures last month showed UK government debt is at its highest level in 60 years compared to the size of the economy. Borrowing has plugged the gap between soaring spending and declining tax receipts, and mass bond-buying by the central bank with newly created money has kept a lid on borrowing costs.
The Bank of England has been institutionally independent from central government for more than two decades, but Sunak said he and the bank’s governor Andrew Bailey were in “constant communication.” He said their measures were “carefully designed to complement each other.”
Furlough scheme extension ‘came too late for some in the culture sector’
Theatres have been hit hard by coronavirus (Dominic Lipinski/PA)
Tom Horton, PA
Thu, 5 November 2020
Job losses in the cultural sector and night-time economy could have been avoided if businesses had been given more warning about the furlough scheme extension, industry figures have said.
On Thursday, Chancellor Rishi Sunak announced the scheme would now continue until the end of March after initially resisting calls for it to be continued.
Theatres Trust director Jon Morgan said the announcement is “fantastic news” for theatres, but job losses “could have been avoided” if venues had previously known they would be in line for support throughout the winter.
“The earlier these things are announced, obviously the better,” he told the PA news agency.
Despite the problems caused by the delay, Mr Morgan said the furlough extension is welcomed by the industry.
He said: “The extension of the job retention scheme is fantastic because when lockdown lifts, some theatres will reopen with social distancing, but really on a loss-leader basis, it is not a long-term solution.
“The vast majority will remain closed and this is going to help them survive during that period until we get to that point where theatres can start to perform to large enough audiences, not necessarily full capacity, but large enough to be able to break even and run viably.”
In August the media union Bectu estimated there had been 5,000 coronavirus-related job losses in the theatre industry.
The furlough scheme pays 80% of wages up to £2,500-a-month and was originally supposed to end in October.
Greater Manchester’s night-time economy adviser Sacha Lord said the extension had been announced too late.
If the action had been taken six weeks ago they could have saved “many, many businesses” and jobs, he told PA.
“When you start a redundancy process, you can’t just phone somebody up and say you are redundant as of tomorrow.
“You have to go through a process, it can take two to maybe a few more weeks and with furlough originally coming to an end this weekend just gone… sadly for many they are now redundant and quite a few people I have spoken to in the last couple of weeks find it a bit of a slap in the face if I’m being honest.”
Lord, who also co-founded the Parklife music festival, added: “It is great but for many it does feel very, very late.”
Theatres have been hit hard by coronavirus (Dominic Lipinski/PA)
Tom Horton, PA
Thu, 5 November 2020
Job losses in the cultural sector and night-time economy could have been avoided if businesses had been given more warning about the furlough scheme extension, industry figures have said.
On Thursday, Chancellor Rishi Sunak announced the scheme would now continue until the end of March after initially resisting calls for it to be continued.
Theatres Trust director Jon Morgan said the announcement is “fantastic news” for theatres, but job losses “could have been avoided” if venues had previously known they would be in line for support throughout the winter.
“The earlier these things are announced, obviously the better,” he told the PA news agency.
Despite the problems caused by the delay, Mr Morgan said the furlough extension is welcomed by the industry.
He said: “The extension of the job retention scheme is fantastic because when lockdown lifts, some theatres will reopen with social distancing, but really on a loss-leader basis, it is not a long-term solution.
“The vast majority will remain closed and this is going to help them survive during that period until we get to that point where theatres can start to perform to large enough audiences, not necessarily full capacity, but large enough to be able to break even and run viably.”
In August the media union Bectu estimated there had been 5,000 coronavirus-related job losses in the theatre industry.
The furlough scheme pays 80% of wages up to £2,500-a-month and was originally supposed to end in October.
Greater Manchester’s night-time economy adviser Sacha Lord said the extension had been announced too late.
If the action had been taken six weeks ago they could have saved “many, many businesses” and jobs, he told PA.
“When you start a redundancy process, you can’t just phone somebody up and say you are redundant as of tomorrow.
“You have to go through a process, it can take two to maybe a few more weeks and with furlough originally coming to an end this weekend just gone… sadly for many they are now redundant and quite a few people I have spoken to in the last couple of weeks find it a bit of a slap in the face if I’m being honest.”
Lord, who also co-founded the Parklife music festival, added: “It is great but for many it does feel very, very late.”
The extension of the furlough scheme has been welcomed by theatres (Martin Crossick/PA)
Mark Da Vanzo, CEO of the Liverpool Everyman & Playhouse theatres, also said it would have been helpful to have had more warning about the extension.
“I think it would have been good to know a little earlier, just so it connected up because the current furlough ended at the end of October.
“So I think it would have been good to know earlier but ultimately from our point of view as an employer, it is good whenever it has come.
“At least it has come.”
The furlough extension was welcomed by trade body UK Music’s chief executive Jamie Njoku-Goodwin.
In a statement, he said: “The music industry has expressed concerns about the level of support on offer – and so the Chancellor deserves enormous credit for listening to those concerns and taking action.
“Today’s announcement will give businesses the certainty they need so they can plan for the next few months and the extension of the furlough scheme will be welcome news to many in the music industry.
“However, there are still many self-employed workers in our sector who have fallen through the cracks and been ineligible for support. We are braced for the impact of Covid-19 to continue for many months, and so those people will need help.
“Our overriding priority is to help support the 190,000 people in the music industry workforce, so our sector can get back on its feet as quickly as possible and continue contributing billions of pounds to the economy.”
Earlier on Thursday, Mr Sunak said: “We’re dealing with a fast-moving health crisis first and foremost, and I think it’s reasonable and right that when the health situation changes and new restrictions need to be put in place, that our economic response, adapts and evolves alongside that.”
The Government is currently distributing a £1.57 billion funding package to the arts.
Mark Da Vanzo, CEO of the Liverpool Everyman & Playhouse theatres, also said it would have been helpful to have had more warning about the extension.
“I think it would have been good to know a little earlier, just so it connected up because the current furlough ended at the end of October.
“So I think it would have been good to know earlier but ultimately from our point of view as an employer, it is good whenever it has come.
“At least it has come.”
The furlough extension was welcomed by trade body UK Music’s chief executive Jamie Njoku-Goodwin.
In a statement, he said: “The music industry has expressed concerns about the level of support on offer – and so the Chancellor deserves enormous credit for listening to those concerns and taking action.
“Today’s announcement will give businesses the certainty they need so they can plan for the next few months and the extension of the furlough scheme will be welcome news to many in the music industry.
“However, there are still many self-employed workers in our sector who have fallen through the cracks and been ineligible for support. We are braced for the impact of Covid-19 to continue for many months, and so those people will need help.
“Our overriding priority is to help support the 190,000 people in the music industry workforce, so our sector can get back on its feet as quickly as possible and continue contributing billions of pounds to the economy.”
Earlier on Thursday, Mr Sunak said: “We’re dealing with a fast-moving health crisis first and foremost, and I think it’s reasonable and right that when the health situation changes and new restrictions need to be put in place, that our economic response, adapts and evolves alongside that.”
The Government is currently distributing a £1.57 billion funding package to the arts.
