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Rishi Sunak is expected to announce a significant expansion of the furlough replacement scheme with the government paying a larger share of workers’ wages to protect companies struggling with Covid-19 restrictions.
Sources in business and industry said the chancellor would cut the level of employer contribution companies must make to receive wage subsidies for their workers on the job support scheme (JSS).
In an intervention just over one week before the launch of the JSS, which replaces the multibillion-pound furlough programme from the start of November, the expansion in government funding comes as pressure mounts on the chancellor to act amid the second wave in Covid-19.
In a bid to assuage growing unrest over the government’s handling of the pandemic, the chancellor held a “hybrid” briefing with business leaders and trade unions in a London restaurant, with executives also attending online, early on Thursday before a set-piece Commons economic update.
Sources at the meeting indicated the expansion in the JSS was likely to be applied nationwide, regardless of whether a business is subject to a higher tier of coronavirus restrictions. A reduction in the number of hours an employee must work could also be included.
Under the previous plans for the JSS, announced just under a month ago, an employee must work at least a third of their normal hours to receive state support. Their employer would pay normal wages for those hours.
Of the remaining two-thirds of each worker’s usual pay, the employer will pay 33% and the government will pay 33%, meaning that the worker will receive 77% of their usual monthly wage in total. The government will be paying 22%, capped at a maximum £697.72 a month. The employer will pay 55%.
However, the expansion in the scheme is expected to dramatically reduce the level of employer contribution, ramping up support from the Treasury. The chancellor is also expected to announce a package of equivalent support for self-employed workers, as well a fresh expansion in taxpayer-funded grants for firms struggling to cope with restrictions.
The Treasury declined to comment.
Source: The Guardian
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