Rishi Sunak has rejected companies’ demands for an extension of the leave scheme despite expectations that the government will delay the easing of the Covid-19 restrictions currently set for June 21.
Business leaders and Labor have said failure to comply with emergency economic support measures in line with public health restrictions will push struggling businesses into bankruptcy and endanger thousands of jobs.
It comes as Boris Johnson is expected to announce that the government’s roadmap to emerge from lockdown in England will be delayed by two to four weeks, amid a rapid increase in cases of the Delta variant being first detected in India.
With only a week before all pandemic restrictions were lifted, sources close to the Chancellor said he believed sufficient economic support measures were already in place to deal with a delay. Two sources said Sunak intentionally “went long” during the March budget by announcing that the leave would last until September for exactly that reason.
However, the scheme will require employers to contribute 10% of an employee’s salary from early July, rising to 20% in August, with taxpayer support reduced from the current level of 80%. Employees will continue to receive the same amount.
Ed Miliband, the shadow business secretary, said many companies fear economic support will be cut when they still cannot trade or profit. “The price for any delay in the roadmap should not be paid by companies,” he said.
“Nightclubs and concert halls, many restaurants and bars, events, arts and wedding industries are still severely affected by the restrictions, but they have repeatedly been left in the dark about economic support. . It must stay in line with public health restrictions. “
Dr Roger Barker, director of policy at the Institute of Directors, a business lobby group, said: “We are now approaching a precipice, with government support for the end or the start of business downturn. . It is essential that this support be deployed in proportion to the prolongation of the lockdown. “
The Treasury believes there are sufficient support measures for businesses in the hardest hit sectors of the economy, with millions of pounds still available for struggling businesses thanks to grants from local authorities and the stimulus fund Government’s £ 1.57 billion cultural program for theater and the arts. places.
Since last March, retail, hospitality and leisure businesses have benefited from 100% relief on corporate rates – the tax paid on the premises they occupy. It should be reduced to 66% from July 1 but will remain in place until the end of March 2022.
The chancellor’s resistance to an extended leave also comes as hotel companies report problems finding enough workers, amid widespread shortages across the country after the lockdown was eased this spring.
While millions of people have taken their leave in recent months, more than 2.1 million people were still in support for emergency coronavirus employment as of mid-May – including up to a fifth of the total hotel workforce.
Unemployment in the UK has stabilized in recent months, helped by extended holidays. The latest official figures show 1.6 million people were unemployed in the three months to March. This represents 4.8% of the workforce, up from 1.7 million in the three months to February.
The Bank of England expects the unemployment rate to peak at nearly 5.5% after the end of holidays, up from 4% – or around 1.3 million people – before the pandemic.
The figures fall far short of initial fears last year that unemployment could reach 12% due to what was to be the worst recession in 300 years.
A Treasury spokesperson said: “The leave program is in place until September – we have deliberately extended our support to provide certainty for people and businesses over the summer.
“The number of people benefiting from the leave program has already fallen to its lowest level this year, with over a million people leaving the program in March and April – showing that our jobs plan is working.
“Businesses can continue to access other aid as well, including corporate interest rate cuts, VAT cuts and our payback loan program. “