LONDON — The U.K. government’s national job support scheme will be made more generous and hospitality businesses affected by local COVID-19 restrictions will get more financial help, Chancellor Rishi Sunak announced, in his latest effort to head off drastic job losses this winter.
Sunak, who was widely praised during the U.K.’s initial lockdown, faces increasing criticism from opponents who accuse the government of failing to adequately support people, while many within his own Tory party are concerned about the impact of ongoing restrictions on the U.K. economy.
Under the revised job support scheme, which will apply nationally, firms that hire employees for just 20 percent of their usual hours will get wage support, with the government paying 62 percent of wages for hours not worked, and employers just 5 percent. Under the previous incarnation of the scheme — announced just one month ago — those benefitting had to work one-third of their hours, and the employer contribution was significantly higher.
In another new measure, Sunak said hospitality businesses in “tier two” areas in England — facing the second-highest level of restrictions, but not forced to close altogether — would be eligible for new grants worth up to £2,100 for each month restrictions are in place. In tier two areas, households are not allowed to mix indoors, a measure that has been a significant blow to the hospitality sector.
The announcement comes after criticism of Sunak’s original support package for businesses affected by local restrictions which, while offering government support to cover two-thirds of the wages of employees at businesses legally required to close in the highest level “tier three” areas, made no new provisions for firms in tier two areas that could stay open but which nonetheless have seen a significant drop in consumer demand.
Sunak told MPs it had become clear “that even businesses that can stay open are facing profound economic uncertainty” and that the hospitality sector had found the “impact of health restrictions on their businesses is worse than they’d hoped.”
Many areas of England, including London, are now under tier two restrictions, while the Liverpool city region, Lancashire, South Yorkshire and Greater Manchester are either in tier three or about to enter it. Many areas have been in tier two restrictions, or under similar measures, for many weeks.
Labour’s Shadow Chancellor Anneliese Dodds accused the chancellor of only having “caught up and listened to the anxieties of workers and businesses when it looks like these restrictions will be affecting London and the West Midlands.”
Sunak also announced an increase in support available to self-employed people who have had to stop trading or seen significantly reduced income, with the next round of three-month grants increased from 20 percent of income to 40 percent, increasing the maximum grant to £3,750.
Kate Nichols, chief executive of business association UKHospitality, said the intervention on wage support was “huge and very welcome” and that the chancellor had “saved hundreds of thousands of jobs in hospitality and supply chain.”
The Institute of Directors also welcomed the changes. “The chancellor’s willingness to fine-tune support in light of the developing circumstances will continue to be absolutely vital in the months ahead,” said Director General Jonathan Geldart.
The total cost of the new measures will depend on take-up, but Treasury officials estimate it will extend to billions of pounds.
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