Rishi Sunak will today unveil yet another bailout amid warnings that thousands of bars and restaurants in Tier Two lockdown areas face going bust.
In a dramatic Commons statement this morning, the Chancellor is expected to boost support for sectors like hospitality by hundreds of millions of pounds, after a wave of anger at ‘loopholes’ in his existing provision.
While businesses forced to close in the harshest Tier Three areas can access significant funding, there is less available for ‘high risk’ Tier Two regions such as London and Essex – even though the ban on households mixing indoors means that many are getting hammered.
Tory MPs have been increasingly alarmed at the gap, amid warnings that the crisis is set to drag on well into next year. Few details are yet known about the new package, with expectations that it will extend the previously-announced Job Support Scheme when furlough ends next month.
Mr Sunak is holding a breakfast briefing with business leaders to outline the changes, before confirming them in the House later.
However, the tightrope the Chancellor is walking was starkly illustrated yesterday when official figures showed the government has borrowed more than a billion pounds every day during the pandemic.
While businesses forced to close in the harshest Tier Three areas can access significant funding, there is less available for ‘high risk’ Tier Two regions such as London and Essex – even though the ban on households mixing indoors means that many are getting hammered
The Chancellor (pictured in Downing Street yesterday) will update MPs this morning on a package of support set to cost hundreds of millions of pounds to help firms in sectors such as hospitality, which have been badly hit by new restrictions this month
Another £36.1billion was borrowed in September – the third-highest month on record and compared to just £7billion a year ago – as tax revenues slumped and the Treasury poured out bailout money
As the Chancellor prepared to pour more money into struggling UK plc:
- Rishi Sunak will today launch a rescue package to help firms hit by Covid restrictions retain their staff;
- South Yorkshire agreed a deal to move into Tier Three from Saturday, meaning 7.3million in England will be living under the toughest Covid rules;
- Talks to put Nottinghamshire into the ‘very high risk’ category were said to be close to completion;
- Boris Johnson sought to bypass Andy Burnham by offering £60million of coronavirus help directly to local councils in Greater Manchester;
- Economists warned that lockdowns were killing even more people than they ‘could possibly save’;
- Labour’s Angela Rayner was forced to apologise after she called a Tory MP ‘scum’ during a Covid-19 debate;
- 191 further deaths from coronavirus were reported yesterday, with daily cases at a record 26,688;
- Hospitals stepped up the cancellation of routine surgery and non-Covid appointments amid a surge in virus admissions;
- A Government adviser suggested a vaccine could be here by winter’s end;
- Scotland Yard agreed to withdraw a letter urging pubs and restaurants to snoop on their customers;
- Prince William spoke of the ‘unimaginable challenges’ faced by cancer patients as a result of coronavirus;
- The ex-head of the civil service took a parting shot at Dominic Cummings over his lockdown trip to Durham;
- National debt has soared to the highest level in 60 years;
- A major report warned Covid-19 must not be used as an excuse to delay social care reform;
- Four university students were fined £10,000 each and suspended from their courses for staging a house party.
Firms forced to close in Tier Three, such as betting shops and soft play centres, can already furlough their workers on two-thirds of their wages.
But there has been an outcry from hospitality firms in Tier Two, whose business models have been wrecked by restrictions that mean people can no longer meet socially indoors.
Tier Two restrictions now cover many of the most heavily populated parts of the country, including London, Birmingham, York, Essex and the North East.
Mr Sunak’s intervention is expected to cut the costs faced by employers wanting to keep workers on part-time.
The Chancellor was last night finalising plans to ‘tweak’ the existing Job Support Scheme, which offers help to employers who are able to keep staff on for at least a third of their hours.
Under the scheme, which officially launches from November 1, staff can have their wages topped up to 77 per cent of normal.
The state and employer each fund 50 per cent of the cost of hours not worked. But critics have warned that the scheme gives too little incentive to firms to retain staff.
Mr Sunak is expected to cut the cost of the employer’s contribution, with the state picking up more of the bill.
West Midlands Mayor Andy Street said he was ‘optimistic’ the Chancellor will close the loopholes.
‘The government have given incredible support to businesses, but clearly this particular point was just one that was completely missed in planning the tier 2 restrictions so I am really optimistic that they will respond,’ the Tory mayor told BBC Radio 4’s Today.
‘The government didn’t expect us to be in a position through the autumn where we were having a rising level of the virus to this extent, so if you look at the design of the winter economy package at the time that seemed rational but clearly events have moved very quickly.’
Boris Johnson meets members of the Armed Forces on the terrace of No10 Downing Street, to mark Black History Month
Treasury sources were tight-lipped about the precise details of the new scheme last night.
But any adjustment of the employer’s contribution is likely to mean a large bill for the taxpayer.
The Treasury has modelled anything from two to five million people taking up the support at a cost of roughly £300million a month – a total cost of up to £9billion over six months.
Downing Street yesterday hinted at the move, with the Prime Minister’s official spokesman saying: ‘We do recognise that businesses operating in Tier Two will be facing difficulties because of reduced demand.’
Another proposal on the table is to broaden the criteria of the Job Support Scheme to include firms forced to close ‘by circumstance’ rather by law, according to the Telegraph.
Cash grant payments to hard-hit businesses of up to £3,000 a month could also be given to companies which are not legally requited to close but have shut because opening is commercially inviable.
Mr Sunak has come under mounting pressure to shore up jobs support after winding down the furlough scheme this month.
South Yorkshire yesterday became the latest region to enter Tier Three after ministers agreed a funding package worth £41million.
Sheffield City Region’s Labour mayor Dan Jarvis said: ‘The number of people with Covid in our hospitals has doubled over the last ten days, with no signs this will relent over the coming weeks. Inaction was not an option.’
Mr Jarvis appeared to take a swipe at Greater Manchester mayor Andy Burnham, who held out against a deal with ministers, saying South Yorkshire had ‘taken the responsible route to ensure we save lives and livelihoods, and protect our NHS’.
He added: ‘I honestly don’t think I could have got any more money out of the Government.’
But other senior figures in the region called for more financial aid. Louise Haigh, Sheffield Heeley MP and shadow cabinet minister, claimed ministers were ‘treating the North with contempt’.
Rishi Sunak and his chief secretary to the Treasury Stephen Barclay in the Commons on Wednesday
In South Yorkshire, case rates range from 285 people per 100,000 in Doncaster up to 402 people per 100,000 in Sheffield, officials said.
But Downing Street said talks on moving the North East and Teesside into Tier Three had been ‘paused’ following a decline in the Covid rate.
There were 276.1 cases of coronavirus per 100,000 people in the North East for the week to October 16, down from 316.6 the previous week.
Government sources played down reports that chief medical officer Professor Chris Whitty is drawing up plans for a series of regional ‘circuit breakers’ next month, with even tighter restrictions.
Pubs and restaurants in much of Scotland will remain closed for another week, Nicola Sturgeon said yesterday.
The First Minister said restrictions introduced at the beginning of October – which were intended to last for two weeks – would continue for a third week.
It follows the announcement that there have been 1,739 positive tests reported in the past 24 hours and 28 deaths.
Miss Sturgeon added that a new five-tiered system of regional restrictions for Scotland would be brought in on November 2.