Rishi Sunak said an unprecedented level of state protection will be offered to support businesses and workers through the coming months to prevent the coronavirus outbreak bringing the economy to its knees.
The chancellor’s second package of measures since he announced a £30bn rescue operation at the budget earlier this month, has been developed in recent days in response to criticism that previous efforts would fail to prevent thousands of companies going bust.
Earlier this week he announced state-backed loans of at least £330bn of tax breaks and other measures worth £20bn to protect companies and households suffering amid the economic collapse triggered by the virus.
A fresh scheme will go further and offer greater protection, he said.
The Coronavirus job retention scheme will offer all employers – private companies, not-for profit organisations and charities – access to a grant covering up to 80% of the average wage, worth up to £2,500 a month.
The grant will be backdated to 1 March and available from next month. It will be open initially for three months.
The chancellor said it matched the promises made by some other European countries – Sweden, Norway, Denmark, Portugal and Austria among them – and would allow companies who have sent staff home to continue paying them with government cash.
The Treasury expects the move will prevent thousands and possibly millions of jobs being made redundant in the coming weeks. The US has already seen a large increase in jobless claims as companies lay off workers. There are predictions that next week millions of workers could be added to the US claimant count.
VAT deferral. No businesses will pay VAT until the end of June, a deferral of tax payments for another quarter. At a cost of £30bn, companies will not need to pay what VAT is owed until the end of the year.
The coronavirus business interruption loan scheme will be interest-free for 12 months, instead of the initially proposed six. The move will let companies apply for the fund even when the worst of the virus outbreak has died down. It reflects warnings from economists that the ripple effects of the virus could take much of the year to dissipate
Universal credit standard allowance will be increased by £1,000. Tax credit allowance will also be increased. This will benefit 4 million low-income families, Sunak said, and with other measures to boost benefit payments cost £7bn.
Measures for the self-employed, previously denied payments if they are off work sick, will be able to access sickness benefit of £94.25 a week.
Other measures. Previously, Sunak said cash grants worth £25,000 would be made to retail, leisure and hospitality firms to help them survive the period of turbulence. Businesses with fewer than 100 employees in the country across all sectors of the economy will be able to seek grants worth £10,000.
Not all measures were given a pricetag, but business groups and trade unions agreed that it was biggest subsidy of economic activity undertaken by the British government.