UK Chancellor of the Exchequer Rishi Sunak, who had pledged to do "whatever it takes" to save people's jobs and livelihoods through the coronavirus pandemic, on Friday unveiled an "unprecedented" wage boost to his COVID-19 rescue package. Britain's Indian-origin finance minister announced that the UK government would pay 80 per cent of wages for employees not working, up to 2,500 pounds a month.
"Today I can announce for the first time in our history the government is going to step in and pay people's wages," he said, addressing the daily Downing Street briefing alongside British Prime Minister Boris Johnson. "We said we would stand together with the British people and we meant it," he said.
A coronavirus job retention scheme will mean companies will be able to contact the tax department, HMRC, for a grant to provide most of the wages for people who are not working but are kept on payrolls. And, the Coronavirus Business Interruption Scheme will be interest free for 12 months, rather than six months as initially planned, with loans available from Monday.
In order to provide "further cashflow support", the Chancellor said he will defer the next quarter of VAT payments. He described the government's planned economic response as the most "comprehensive" in the world.
He said: "I know that people are worried about losing their jobs, about not being able to pay the rent or mortgage, about not having enough set by for food and bills. I know that some people in the last few days have already lost their jobs. You will not face this alone. But getting through this will require a collective national effort."
Speaking directly to businesses, he added: "The government is doing its best to stand behind you and I'm asking you to do your best to stand behind our workers. When this is over, and it will be over, and remember the many small acts of kindness done by us and to us. We want to look back on this time and remember how we thought first of others and acted with decency."
Sunak had already tabled an estimated 350-million pounds loan and grants package to assist struggling businesses through the crisis. On Thursday, he held further roundtables to work out an employment and wage subsidy package to try to protect millions of jobs.
Business groups and union leaders held late night discussions with the Chancellor to push for help to pay wages and prevent businesses from collapsing and wiping out thousands of jobs.
"We are working round the clock to deliver further support to individuals and families whose jobs and incomes will be affected by COVID-19 and to do so urgently," said Sunak, in reference to his latest set of meetings. "We are in this together, and will all have to play our part," he said.
During his weekly briefing from Downing Street on Thursday, British Prime Minister Boris Johnson had indicated that Sunak was working on further help to be announced on Friday as he urged struggling businesses to "stick by their employees, because we're all going to need them".
Carolyn Fairbairn, Director-General of the Confederation of British Industry, said: "Firms will do all they can to help employees through these unprecedented times. But the exponential growth of the economic impact requires an urgent, bold new approach to protect pay and livelihoods. "The Chancellor's commitment to go further, at speed is right together we must deliver it within days, not weeks."
The UK government said it has already announced expansions in eligibility for welfare support and a hardship fund to support the most vulnerable, as well as support to businesses to help with cash flow and paying wage bills.
"As well as providing emergency support to business, it is essential that money goes into workers' pockets now. We must do whatever it takes to stop businesses going to the wall and workers being plunged into poverty," said Frances O'Grady, General Secretary of the Trades Union Congress.
Mike Cherry, National Chairman of the Federation of Small Businesses, added: "It's vital that money is available on the front-line now. We have seen an escalation in the health response; now it is right for there to be an escalation in the economic response."
One proposal said to be under discussion is for the UK to follow the lead of countries such as Denmark, where the government has promised to cover 75 per cent of salaries at private companies for three months, if they promise not to let staff go.
The Bank of England has cut interest rates twice twice in a little over a week to try to provide support to the UK economy, while lenders are preparing to offer a three-month mortgage holiday to homeowners in financial difficulty due to the virus.