Sunak to Update U.K. Furlough Support After Scottish Demands
(Bloomberg) -- Chancellor of the Exchequer Rishi Sunak is expected to unveil details of his U.K. wage support program Thursday, amid calls from his own side for more generous help for people who can’t work due to coronavirus restrictions.
The Treasury has extended furlough payments at 80% of employee wages until Dec. 2 to cover a second lockdown starting in England on Thursday, drawing immediate demands for it to apply if Scotland -- or any of the devolved nations in the U.K. -- have to impose similar virus restrictions at a later date.
Sunak will announce a further extension of the wage support program beyond Dec. 2 in areas kept in the highest levels of coronavirus restrictions, the Sun newspaper reported, citing people familiar with the matter it didn’t identify. The Treasury didn’t immediately respond to a request for comment.
The chancellor “has shown great adaptability and fleetness of foot in making the adjustments that we continue to need,” Justice Secretary Robert Buckland told the BBC on Thursday. “The extension of the furlough scheme was warmly welcomed, there were more measures to help self-employed people too, and I’m sure we can expect broadly the same sort of careful intervention that he has championed throughout this crisis.”
With the U.K. in the grip of a fresh wave of coronavirus -- recording another 492 deaths Wednesday -- the chancellor is under pressure to loosen the fiscal taps again, after he had started to scale back support programs.
QE Boost Delivers Bigger-Than-Expected
Sunak’s effort to bolster the economy received a boost from the Bank of England as it revealed a new round of monetary stimulus on Thursday morning. The central bank increased its bond-buying program by a bigger-than-expected 150 billion pounds ($195 billion) in another round of stimulus.
On reforms to the furlough program, former Health Secretary Jeremy Hunt -- who now chairs the House of Commons’s Health Committee -- called for payments to people required to self-isolate to be made more generous and less onerous to apply for.
At present, people on low incomes who are required to self-isolate because they have symptoms of coronavirus, or have come into contact with a positive case, are eligible for a 500-pound grant. However, the applicant must also provide a number of documents to the government.
“It’s just got to be an awful lot simpler,” Hunt, a senior Conservative, said in an interview. “If your employer doesn’t pay your wages, we’ll pay your wages for the period of time you have to isolate. End of story.”
Johnson said the Chancellor will provide “further elucidation on the details of the entire package of support that this government is bringing for the people of the entire U.K.” when he makes his statement, which is scheduled for about 12:30 p.m. Thursday.
Sunak will address the question of whether the furlough support -- at 80% of wage levels -- will be available to any parts of the U.K. in lockdown, including Scotland and Wales, beyond the current end date of Dec. 2, according to a person familiar with the matter.
Johnson indicated Wednesday that would be the case, though his answers didn’t satisfy members of Parliament who repeatedly demanded more clarity on whether Scotland -- or Wales or Northern Ireland -- could themselves trigger the wage support or whether it would be up to Johnson’s central government.
“I really do not know how to exhaust my affirmative vocabulary any further,” Johnson said in Parliament, when pressed on the issue by the Scottish National Party. “They won’t take ‘yes’ for an answer.”
The furlough extension was announced Saturday just hours before the Treasury’s flagship program was due to be replaced with a less generous system of support for workers. It was the third major update of support levels for businesses and workers since the chancellor unveiled a winter economy plan Sept. 24 that was supposed to tide the country’s businesses through the months ahead.
The constantly changing levels of support have increasingly frustrated businesses. Sunak’s counterpart in the main opposition Labour Party, Anneliese Dodds, urged him to set out a six-month plan for the economy and abandon “this last-minute scramble” to roll out new measures.
That chimes with calls from Carolyn Fairbairn, director general of the country’s biggest business lobby, the Confederation of British Industry, who said Sunak should provide companies with more clarity on the path forward.
“As lockdown shutters come down for many firms, extending furlough till next spring is the right thing to do,” she said on Twitter. “Firms and employees need more certainty and stability to plan and recover.”
©2020 Bloomberg L.P.