The British government will subsidise wages for workers whose hours are cut due to COVID-19 restrictions.
ADVERTISEMENTThe UK's finance minister has unveiled a new jobs support programme a day after the country announced fresh coronavirus restrictions.
The scheme will replace the furlough scheme that is set to expire in October. Under that programme, firms could put workers on temporary leave (furlough) and the government paid 80% of their salary.
Under the new scheme, the government will help to pay up to two-thirds of salaries for workers clocking shorter hours due to the pandemic. The programme will apply to small and medium-sized businesses.
Chancellor of the Exchequer Rishi Sunak said his goal was to support businesses that are remaining open but face lower demand during the winter months.
"The government will directly support the wages of people in work giving businesses who face depressed demand the option of keeping employees in a job on shorter hours rather than making them redundant," Sunak told the House of Commons.
"For at least the next six months, the virus and restrictions are going to be a fact of our lives. Our economy is now likely to undergo a more permanent adjustment," said Sunak.
It comes as the United Kingdom records a flare-up in new cases after suffering one of the deadliest outbreaks of COVID-19 in Europe with a total of more than 41,000 deaths.
The UK recorded more than 6,000 new cases yesterday, the highest number since early May.
"We must learn to live with [the virus] and live without fear," Sunak said in the House of Commons emphasising that the UK hopes to move towards a post-pandemic economy as well.
Labour and Scottish National Party politicians have repeatedly criticised the government for ending the furlough scheme too soon, which they say puts jobs at risk.
Labour Party leader Keir Starmer urged Boris Johnson to keep the furlough scheme during prime minister's questions on Wednesday.
"This is not theoretical. Yesterday 6,000 jobs were lost at Whitbread, one of the major employers in the hospitality sector," Starmer said.
He added that major groups including the British Chamber of Commerce, the Confederation of British Industry (CBI), the Federation of Small Businesses as well as the governor of the Bank of England "are all calling on the Prime Minister to stop and rethink support for businesses affected, don't withdraw furlough."
Sunak said on Thursday the furlough scheme had "provided immediate, short-term protection for millions of jobs through a period of acute crisis".
"But as the economy reopens it is fundamentally wrong to hold people in jobs that only exist inside the furlough," he added.
Sunak also said he would extend loan repayments for small businesses tapping into the £38 billion (€41.6 billion) in government loans to bounce back from the pandemic.
The government will also keep a reduced value-added tax on the tourism and hospitality sector, which will continue to remain impacted by the crisis.