LONDON – U.K. Treasury chief Rishi Sunak is increasing subsidies for bars, pubs and restaurants hammered by strict new measures to slow the spread of COVID-19, amid criticism that the government has failed to protect small businesses and workers from the economic hardship caused by the pandemic.
The new funding, which could cost 13 billion pounds ($17 billion) over the next six months, is aimed at businesses that are struggling to attract customers because of restrictions on social interactions, even if the government doesn't order them to close.
It comes just a month after Sunak unveiled his “job protection" plan, which business owners said was so inadequate that it gave them an incentive to lay off workers rather than keep them on the payroll.
“There are difficult days and weeks ahead, but we will get through this together,″ Sunak told the House of Commons on Thursday. “People are not on their own. We have an economic plan that will protect the jobs and livelihoods of the British people wherever they live and whatever their situation.”
Prime Minister Boris Johnson's government is banking on a three-tiered, regional strategy to control the coronavirus pandemic without resorting to a nationwide lockdown that it says would devastate the economy. Cities in northern England, where infection rates are highest, have resisted efforts to move them into the highest level of restrictions because they say government promises of financial support aren't enough to protect businesses and individuals.
Britain is facing Europe’s deadliest coronavirus outbreak, with more than 44,000 confirmed deaths. While the pandemic eased during the summer months, infection rates, hospitalizations and deaths are now rising across the country.
At a press conference Thursday afternoon, Johnson thanked people for their “bravery” and “patience” in living under coronavirus restrictions and repeated his belief that another lockdown is “not the right course” for the U.K.
“Not when it has been suggested that we might have to perform the same sort of brutal lockdowns again and again in the months ahead,'' he said.
In the highest-risk areas of England, pubs have been ordered to close, people are barred from mixing with members of other households and travel in and out of the area is discouraged. Northern Ireland, Scotland and Wales have implemented their own control measures under the U.K.'s system of devolved authority.
Hospitality businesses are under particular pressure because the measures severely limit social gatherings, even under the lower levels of restrictions imposed on areas with less severe outbreaks. That reduces the number of people who go out for dinner or to meet up with friends, reducing income and forcing employers to lay off workers.
But most had not been able to take advantage of the previous government aid program, which was focused on businesses that were ordered to close under the highest level of restrictions.
The opposition Labour Party's spokeswoman on fiscal issues, Anneliese Dodds, described Sunak's plans as “a patchwork of poor ideas rushed out at the last minute.”
She demanded to know how many jobs had been lost because the government hadn't anticipated the impact of the new restrictions.
“Will he apologize to those who have already lost their jobs, seen their businesses slip through their fingers in those areas which have not had that support until now?” she asked.
The changes announced Thursday expand the government's job support program, which replaces the earlier furlough program that ends Nov. 1.
The program will now cover employees who work as little as one-fifth of their previous hours — or one day a week — rather than one-third of their hours. Employers will be required to cover the cost of just 5% of unworked hours, compared with 33% in the original program. Together, that means the government will now pay up to 75% of an employee's wage cost, close to the 80% covered by the furlough program.
In addition, the government is offering grants of up to 2,100 pounds ($2,700) a month for hospitality venues affected by the increased restrictions imposed on areas classified as “high risk," or tier two. Additional support is already available for businesses in “very high risk areas," or tier three.
“I’ve always said that we must be ready to adapt our financial support as the situation evolves, and that is what we are doing today,'' Sunak said. “These changes mean that our support will reach many more people and protect many more jobs.''
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