UK Government announces wage package amid coronavirus outbreak

Chancellor Rishi Sunak’s announcement that the UK Government will pay the wages of employees unable to work due to the COVID-19 outbreak has been welcomed by the Association for Consultancy and Engineering.

UK Government announces wage package amid coronavirus outbreak

Rishi Sunak

In a statement on Friday, the Chancellor said the government will pay 80% of salary for staff who are kept on by their employer, covering wages of up to £2,500 a month.

Mr Sunak said that these measures will stop workers from losing their jobs because of the financial burdens fo the crisis.

Various companies throughout the UK have warned that the virus could result in their collapse, wiping out thousands of jobs.

It is understood that the wage subsidy will apply to firms where bosses have already had to lay off workers due to the coronavirus, as long as they are brought back into the workforce and instead granted a leave of absence.

Mr Sunak said that the new measures would mean workers should be able to keep their jobs, even if their employer cannot afford to pay them.

He said that the wages cover would be backdated to the start of March and last for three months, adding that he would extend the scheme for longer if necessary.

The Chancellor also announced that the Coronavirus Business Interruption Loan (CBIL) scheme will now give interest-free loans for 12 months rather than six.

The next quarter of VAT payment for firms will also be deferred, providing a £30 billion injection in the economy.

The Chancellor stated: “To help businesses keep people in work, I’m deferring the next quarter of VAT payments. No business will pay VAT from now to mid-June. You’ll have until the end of the financial year to repay those bills.”

The unprecedented package also included a £1,000 a year uplift to Universal Credit standard allowance and the Working Tax Credit basic element for the next 12 months. The self-employed will now get the full Universal Credit at a rate equivalent to statutory sick pay and self-assessment payments will be deferred until January 2021. 

Hannah Vickers, chief executive of the Association for Consultancy and Engineering (ACE), said: “We are living in truly historic times, so today’s announcement should not come as a surprise. Yet the scale and scope of the Chancellor’s interventions are unprecedented.

“Business leaders within our membership base, our industry and across the wider economy will breathe a sigh of relief to see significant support on wages, procurement process changes to ease cashflow pressure and delays to VAT. Taken together, these measures will ensure businesses can weather the storm of COVID-19 and emerge fairly intact in the immediate term.

“With short term issues now put to bed, focus needs to turn to the medium term and our industries’ role in the economic recovery of the nation. We wrote to the Chancellor earlier in the week with a range of suggested measures to help our members develop our capability to do this, and we look forward to meeting with his team to discuss how we can ensure construction and infrastructure investment remains a catalyst for growth when normality returns.”

  • Read all of our articles relating to COVID-19 here.

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