U.K. Government to Top Up Wages for Six Months As COVID Measures Continue

British Chancellor Rishi Sunak has announced that the government will pay up to two-thirds of people’s wages as long as employees are working—and being paid for—one-third of their hours.

Sunak has said that the British economy is going through a “more permanent adjustment” and what happens now “must be different from what came before.” The scheme is estimated to cost around £300 million a month, though more details will be released later today, and is focused on keeping “viable” jobs that will be needed as the economy recovers in 2021.

This new “job support scheme” is to replace the “job retention scheme”, which furloughed workers on 80 percent pay. Though both take similar measures, it was politically impossible to U-turn and continue the existing scheme. The chancellor had previously stated that the furlough scheme, where workers were kept in jobs and 80 percent of salaries were paid by the government, would not continue past October 31 and it was not reasonable for it to continue. The new scheme is less generous than the old one.

It works out as the government covering 22 percent of a worker’s total pay. The company will pay one-third for hours worked, the government covering one-third of lost pay and firms covering the other third. The workers will receive around three-quarters of their total pay. Government support is capped per person at £697.92 a month so means anyone earning over £38,000 will have their support limited. It is a complicated sum but the government has released graphics to explain the situation:

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“These are policies we have never tried before,” Sunak said.

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This means that the Autumn Budget, which usually takes place in October, has been canceled. A Treasury statement said: “As we heard this week, now is not the right time to outline long-term plans – people want to see us focused on the here and now. So we are confirming today that there will be no Budget this autumn.”

Critics have said that this means the scrutiny needed on government decisions will not be possible within Parliament.

Sunak commended his “radical interventions in the labor market” that had already been responsible for “protecting millions of jobs and businesses.” Sunak also announced a “pay as you grow” scheme for business loans, with loans paid back at different paces depending on the pace of a business’ recovery. He also said VAT sales tax will be held at 5 percent until March 31, 2021, down from the usual 20 percent.

Shadow Chancellor Anneliese Dodds said she had called for these sorts of measures over 40 times and had been “rebuffed” by the government over 20 times. “That delay in introducing this new scheme will have impacted businesses’ confidence,” she told the House of Commons.