Rishi sunak, chancellor, has unveiled a multibillion-pound local furlough scheme for workers in pubs, restaurants and other businesses forced to close as the country braces itself for a winter of local coronavirus lockdowns.
Tighter covid restrictions are being drawn up for northern england, with boris johnson expected to make an announcement on monday, alongside a new three-tier lockdown system.
New data published on friday showed there are now 3,090 covid-19 patients being treated in english hospitals seven fewer than on the march day when the national lockdown was imposed.
Jonathan van tam, deputy chief medical officer, warned at a private meeting that the situation was critical.
The new furlough scheme will only be available to companies forced to close by restrictions aimed at curbing the virus. businesses such as those in the hospitality sector in areas placed in the highest tier would be required to shut their doors. mr johnson is still weighing whether to include other sectors, such as hairdressers.
Amid growing criticism from civic leaders in northern cities such as manchester and liverpool about the governments intentions, mr sunak on friday rushed out a new package of covid job support his second in two weeks.
From november 1, workers in outlets forced to close in england will be given 66 per cent of their usual wages by the state up to a maximum of 2,100 per month.
Employers will not be required to contribute towards wages and only asked to cover national insurance and pension contributions.
The treasury will also pay cash grants to companies forced to close in local lockdowns to help with their fixed costs, with payments linked to rateable values which represents the rental cost of the property of up to 3,000 per month payable every two weeks.
The scheme will last six months, although in january there will be a review to examine whether the levels and criteria are appropriate. it is expected to cost hundreds of millions of pounds a month, according to one treasury official.
The announcement came hours after official data showed the uk economy grew less than expected in august despite a boost from the hospitality sector, adding to pressure on policymakers to offer more support.
Fridays announcement reflecting a surge in infection rates in northern cities follows the decision by nicola sturgeon scotlands first minister, to close all pubs and restaurants in central scotland.
Jack spensley, manager of the dickens pub in middlesbrough, hailed the announcement. we were on the point where we thought we might have to make some of them [staff] redundant, said mr spensley. the extension of the scheme means we can keep our loyal staff and take them back, which is good news.
The new local furlough was billed as an expansion of the chancellors less generous job support scheme, which only comprised wage subsidies of up to 22 per cent for employers for part-time workers. but it effectively extends the current furlough system, subsidising wages where employees cannot work at all and employers can cover only a small part of the cost.
It marks a sudden change of tack by mr sunak, who has for months insisted that full furlough could not continue beyond the end of october.
Just two weeks ago, with virus cases already clearly on the rise, the chancellor set out details of his winter economy plan, including the job support scheme saying it would be fundamentally wrong to hold people in jobs that only existed because of wage subsidies.
Anneliese dodds, the shadow chancellor, accused mr sunak of serial incompetence, saying: now hes tearing up his winter economy plan before the autumn because he realises how many jobs are at risk.
Many executives said the new scheme would not prevent thousands of job losses.
Kate nicholls, chief executive of trade body ukhospitality, said: its a good first step...but it doesnt do anything to help the businesses that are facing 30 to 50 per cent reductions in trade due to national restrictions. it only applies if youre closed.
Companies can only claim the grant while subjected to state restrictions and workers will need to have been off work for at least one week. companies that close their venues but keep providing food deliveries will still be eligible.
Mr sunak said he had always promised to do whatever is necessary to protect jobs and livelihoods during the covid-19 pandemic. the extension of the job support scheme will provide a safety net for businesses across the uk who are required to temporarily close their doors.
The payments will apply not only to companies caught up in the new restrictions including bowling alleys but also nightclubs and adult entertainment venues that have remained closed on orders from the government since the start of the crisis.
However, it does not help large numbers of sporting and music venues that are allowed to open but are unable to do so because of a lack of customers.
The grants are only for england but the treasury will give 1.3bn to the devolved administrations in scotland, wales and northern ireland to fund these or other support measures.
Mark drakeford, welsh first minister, said wales was not expecting to close hospitality businesses as they were spreading the infection only in isolated cases.