UK chancellor announces 'local furlough' scheme and business grants

Chancellor Rishi Sunak has announced new support for businesses and employees hit by local lockdowns.

The chancellor on Friday said his job support scheme would be expanded to offer targeted support to areas where businesses are ordered shut by the government. New, tougher local lockdowns are expected to be announced next week.

Under the extension, staff unable to work will be able to claim wages from the government in a similar manner to the furlough scheme. The government will pay two-thirds of wages, up to a maximum of £2,100 per month.

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The chancellor also handed more support to companies. Businesses caught up in local lockdowns will be eligible for grants of up to £3,000 a month to make up for lost income.

“I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves,” the chancellor said in a statement.

“The expansion of the Job Support scheme will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time.”

Watch: What is the Chancellor’s Job Support Scheme?

The Job Support scheme was announced just two weeks ago and initially only covered staff working part time in “viable” jobs. Employers would pay them for working a third of their usual hours, while the government would top up their salary with another third.

The extension brings the scheme more in-line with the furlough programme, which is due to end this month.

The Treasury said the extension of the scheme meant employers caught in local lockdowns would not need to contribute to staff wages, although they will be required to continue to pay national insurance and make pension contributions.

Businesses that are forced to radically reduce service by moving to takeout only or only outdoor service — and staff losing hours as a result — are also eligible for support under the extension.

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The news comes as the government is expected to announce new measures to curb the spread of COVID-19 in the coming days. Downing Street will reportedly launch a “traffic light” system that could see all non-essential businesses forced to close in areas with the highest rates of infections.

Carolyn Fairbairn, the director general of the Confederation of British Industry (CBI), said the extension of the Job Support scheme “should cushion the blow for the most affected and keep more people in work”.

Mike Cherry, the national chairman of the Federation of Small Businesses, said: “Evolving the Job Support Scheme to provide 2/3 of total salary costs together with enhancing existing cash grants for those faced with this scenario are both game-changers, and it’s welcome to see them adopted today.”

While restrictions are due to be announced in the coming days, the job support scheme will only begin on 1 November. Businesses and staff must rely on the furlough scheme and other government support measures until then.

Sacha Lord, an entrepreneur and advisor to the Greater Manchester Authority on night life, said on Twitter he was “slightly bemused” by the timing of the scheme.

“They've clearly forgotten they closed entry to existing scheme in June,” Lord wrote. “If the North locks down on Monday, that's three weeks without any financial support for those who took PM's advice to 'get off furlough and get back to work'.”

The UK-wide Job Support scheme will run for six months, with a review of the policy in January.