UK Finance Minister Rishi Sunak announced a new emergency plan package to curb unemployment, replacing the country’s furlough scheme, which expires next month.
According to CNBC, the employment support program will directly increase the wages of employees who work shorter hours due to restrained business needs, so that workers can keep their jobs in a shorter period instead of being laid off. It is reported that this new support plan will last from November this year to June next year.
Employees must work at least a third of their normal hours and be paid for that work normally, but the government will increase salaries by covering the remaining two-thirds of the pay. The scheme would target all small and medium-sized businesses across the UK, although large companies may be eligible if they experienced a drop in revenue during the crisis.
At the heart of the new measures is the replacement of the previous aid program, which supported up to 8.9 million jobs in the private sector last May and ends next month.
The Minister of Finance intends to support the hotel and restaurant industry, which have been severely affected by the restrictions linked to the pandemic. He announced that he would extend loan repayments for businesses and postpone a tax cut for the entire sector.
Sunak also announced an extension of the VAT rate of 5% (a value-added sales tax) until March 31, 2021, and committed to defer VAT accounts for companies, in addition to allowing them to split VAT accounts in eleven smaller payments, to avoid a credit crisis in March.
Also, a “pay as you grow” scheme will allow small businesses to extend their government recovery loans, to reduce monthly repayments.
“These are sweeping interventions in the UK labor market, policies which we have never tried in this country before,” the Finance Minister told Parliament, adding that the main objective of his economic policy is to support employment in the country.
For his part, Boris Johnson said his government was doing everything possible to protect jobs by putting in place new creative and imaginative measures.