Rishi Sunak considers more support for firms facing months of restricted trading

Harry Yorke
·2-min read
Rishi Sunak
Rishi Sunak
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Coronavirus Article Bar with counter ..
Coronavirus podcast - Will the three-tier system work?
Coronavirus podcast - Will the three-tier system work?

Rishi Sunak is considering additional financial support for businesses that face months of restricted trading due to large swathes of the country being banned from socialising in homes, pubs and restaurants.

The Treasury is understood to be looking at expanding the support available to firms which are not mandated to close and therefore unable to access the more generous support available to those in the most severe local lockdowns. 

One option believed to be under consideration is to increase the generosity of the job support scheme, with a higher wage subsidy for businesses in Tier 2.

At present the scheme involves the Government paying 22 per cent of people’s wages for part-time working, with the employer contributing 55 per cent and the worker foregoing the rest.

In areas where hospitality and leisure venues are forced to shut, the Treasury will cover 66 per cent of wages, with employers only required to pay for national insurance and pension contributions. 

Breakdown of wages under the job support scheme
Breakdown of wages under the job support scheme

However, with tens of millions of people due to be living under Tier 2 restrictions from Saturday, Mr Sunak is being urged to either increase the generosity of the part-time subsidy or widen the eligibility of the local furlough strand.

Another option would see cash grants, which are available up to £3,000 a month for firms forced to close, extended to firms whose incomes have been slashed by the ban on household mixing. 

Business groups are pressing the Chancellor to change the criteria for grants to include those firms which are forced to close by “circumstance”, as well as though shut by law.

It comes after hospitality bosses on Thursday warned that tougher Tier 2 restrictions due to come into force in London this weekend will put up to 250,000 jobs at risk (see London mayor Sadiq Khan's response, below). 

With 3,640 pubs and 7,556 restaurants in the capital now facing reduced custom as a result of the changes, UK Hospitality chief executive Kate Nicholls said that without additional government support thousands of jobs in the capital will go.

"It will be absolutely catastrophic," she told the BBC.

"It is imperative that the employer contribution of the scheme is removed from all hospitality businesses, as all are facing restrictions.

"From 1 November it is really uncertain whether our businesses will be able to access the new job support scheme but in any case that requires businesses to be able to pay 55 per cent of wages and hospitality just can't afford to do that with no revenues.

"So you've got a real squeezed middle in Tier 2 with next to no help, maximum restrictions and no alternative but job losses."