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Coronavirus: Government will pay 80% of worker wages and defer VAT for three months

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Chancellor Rishi Sunak

Chancellor Rishi Sunak

Lee Goddard, MoD, Crown Copyrigh

Chancellor Rishi Sunak

The Government will cover 80% of ‘retained’ worker salaries up to £2,500 – with no immediate funding limit – and defer VAT payments, the Chancellor Rishi Sunak has announced.

Meanwhile, Prime Minister Boris Johnson has said cafes, pubs and restaurants must close from Friday night, except for take-away food, to tackle coronavirus.

The Government has unveiled the unprecedented wage subsidies to ensure workers are retained by their employers and continue to earn a salary.

“Today I can announce that, for the first time in our history, the government is going to step in and help to pay people’s wages,” he said.

“We’re setting up a new Coronavirus Job Retention Scheme.

“Any employer in the country – small or large, charitable or non-profit - will be eligible for the scheme.

“Employers will be able to contact HMRC for a grant to cover most of the wages of people who are not working but are furloughed and kept on payroll, rather than being laid off.

“Government grants will cover 80% of the salary of retained workers up to a total of £2,500 a month – that’s above the median income. And, of course, employers can top up salaries further if they choose to.

“That means workers in any part of the UK can retain their job, even if their employer cannot afford to pay them, and be paid at least 80% of their salary.

“The Coronavirus Job Retention Scheme will cover the cost of wages backdated to March 1st and will be open initially for at least three months - and I will extend the scheme for longer if necessary.

“I am placing no limit on the amount of funding available for the scheme. We will pay grants to support as many jobs as necessary.”

However, for those who are self-employed the situation is different. “I’m also strengthening the safety net for self-employed people by suspending the minimum income floor”, Mr Sunak said.

“That means self-employed people can now access, in full, Universal Credit at a rate equivalent to Statutory Sick Pay for employees.”

Reaction

Economy Minister Diane Dodds said: “The impact of Covid-19 on our businesses is a global economic crisis, the likes of which has never been experienced before. My priority is to mitigate – as best we possibly can – against the worst effects on our communities.

“Therefore, I welcome this significant economic support package announced by the Chancellor, in particular the support that it offers our workers.

“It is unprecedented in the history of the UK, but extraordinary crises require extraordinary bold action. I have been pushing this issue with Central Government as the policy intervention which has the single greatest impact for our local economy. I am glad that the

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Diane Dodds speaking in her office in Belfast. Pic Kevin Scott

Diane Dodds speaking in her office in Belfast. Pic Kevin Scott

Kevin Scott / Belfast Telegraph

Diane Dodds speaking in her office in Belfast. Pic Kevin Scott

Government has listened to my call, and that of the many groups representing business, tourism and hospitality in Northern Ireland.

“This is a huge crisis for our economy. Many people feared this would cost them their business or their jobs. I welcome the fact that the government is prepared to intervene in this way.

“During this week we have seen the increased pressure facing our local businesses and I would urge all our firms to take advantage of the measures announced to support their workers. The coronavirus job retention scheme will provide an income of up to £2,500 a month for those employees not working. It will be backdated to March and will be available in weeks.

“The increases to both working tax credit and universal credit by £1,000 per year will also help to protect the most vulnerable in society. Furthermore, I welcome the measures supporting the self-employed providing them with access to universal credit. And I am pleased that the Chancellor has decided to defer VAT payment until the end of June.”

NI Chamber chief executive, Ann McGregor, said that the “Chancellor has given businesses some desperately needed breathing room at this critical moment”.

“The commitment to support the salaries of workers at risk of redundancy by up to 80% is extremely welcome, supporting the livelihoods of all those whose jobs were potentially at risk. This commitment followed a call from the Northern Ireland Business Alliance earlier this week and shows that the government is listening to business at this time.

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Ann McGregor, chief executive, NI Chamber

Ann McGregor, chief executive, NI Chamber

Ann McGregor, chief executive, NI Chamber

“We also welcome the deferral of VAT payments which keeps money in the pockets of businesses so that they can pay their people and suppliers.

“As a next step, the government now needs to go all out to ensure that details of the job retention scheme and loan guarantees reach firms on the ground as soon as possible. Given that this situation continues to evolve, government must also keep the door open to additional measures to support business cash flow.”

Having experienced unprecedented customer demand in recent weeks, Lidl Northern Ireland announced today that they are looking to fill more than 120 new store and warehouse positions across its operations.

IoD national director in Northern Ireland, Kirsty McManus, said: “The Chancellor described the measure to support the salaries of workers by up to 80% as ‘unprecedented’ but that is exactly what is called for in these unprecedented times.

“The commitment followed a united push by business organisations including the IoD as part of the Northern Ireland Business Alliance for the government to step up to the plate and help companies here to continue to pay wages.

“The Chancellor has clearly been listening to those calls. Combined with efforts to defer VAT payments and increase Universal Credit, this is major boost to confidence for business and consumers alike, the likes of which we have never seen before and probably never will do again.

“We look forward to seeing more of the detail around these measure in the days ahead and providing any assistance required to our members to ensure they can avail of what is available.

“As a business community and a people, we can get through this period, and emerge with an even greater resilience than even before.”

Angela McGowan, CBI Northern Ireland director, said: “This is a landmark package of measures for business, people and jobs. The Chancellor’s offer of substantial payroll support, fast access to cash and tax deferral will support the livelihoods of millions. Firms and employees will respond with relief and determination.

“Today marks the start of the UK’s economic fightback - an unparalleled joint effort by enterprise and government to help our country emerge from this crisis with the minimum possible damage.  An important day for our country.”

Retail NI chief executive Glyn Roberts said: “This is a welcome move to support the staff of local businesses who have been laid off. I hope that this will be enough to sustain these workers and their families in these difficult few months ahead”

“Our thoughts are with our friends and colleagues in our local hospitality sector as they face closure for the immediate future. They make a huge contribution to our economy and our high streets and we have no doubt will be back stronger than ever after this crisis”

“Locally we need to see the immediate establishment of the Covid-19 Business Support Grant Scheme to provide further support to our economy”

“The Finance Minister also needs to outline when the full one year 100% rates relief, which is in place in the rest of the UK, will be implemented in Northern Ireland”

“Retail NI members and their staff are working exceptionally hard providing a public service, ensuring that the most vulnerable people within our community can purchase food and other essential items. Independent retailers such as convenience stores, grocers, butchers and pharmacies are in the front line of this crisis and deserve every support from Government and the community as a whole."

Colin Neill, chief executive, Hospitality Ulster, said:

“We welcome the direction by the Prime Minister on closures. It’s not an easy thing to accept, but now we know where we stand and can start the process of full close from tonight.

“We also welcome the suite of financial interventions that has been announced by the Chancellor which includes the new Coronavirus Job Retention Scheme that will be made available to any business with no limit on this fund. We now need to make sure that this emergency financial measure gets to our people as quickly as possible.

“This is a comprehensive package on face value, and we hope that this has not come too late for many in our sector. The greater certainty that employers and employees alike have on the salary commitment through the wage protection scheme will reduce anxiety and the fear that people may not have been paid. This will save and retain jobs and businesses alike.”

“In only a matter of days our industry has been decimated with thousands of redundancies and temporary layoffs. This has been the biggest economic shock in living memory.

“We now need to examine the detail in this package and ensure our sector can avail of as many of the measures as possible to save our sector.”

Stephen Kelly, chief executive of Manufacturing NI, said:

"The Chancellor promised to move mountains and he has. Covering up to 80% of wages removes the stress and panic in the workforce and we can begin to collectively support the fight against this horrendous virus and plan for getting out the other side.

"With orders in short supply, it is also a chance for our firms to repurpose to make the things our health system needs and retrain and redesign our factories to ensure that when we get through this pandemic we are better positioned to restart and win more business.

"This has been a horrendously difficult and stressful week for everyone. Our efforts now need to be focused on keeping people in and putting people to productive use."

Londonderry Chamber of Commerce president Redmond McFadden said: “This is a very welcome intervention by the UK Government which will help alleviate the stress and pressure on businesses and workers across the country.

“The Coronavirus Job Retention Scheme will help ease cash flow worries on businesses, large and small, by covering 80% of salaries up to £2500. It is excellent news that this will be backdated to 1 March and that there will be no limit to the amount of funding provided by the Treasury."

Kieran Harding, managing director, Business in the Community, said: “The Chancellor’s significant economic announcement, along with the other measures introduced by the NI Executive, is welcomed by the business community.

"Importantly, it is welcomed by charities and social enterprises who employ a substantial number of people here in Northern Ireland, and who are feeling the enormous impacts of the challenges we face. Many of these organisations are working on the frontline with the most disadvantaged in our society and are committed to continuing their work throughout this crisis. We are indebted to them."