Rishi Sunak CANCELS autumn Budget as he prepares new ‘furlough 2.0’ winter economy plan


Rishi Sunak has cancelled plans for a Budget later this year amid fears over the economic impact of a second wave of coronavirus.

Questions had already been raised over whether the Chancellor’s set piece autumn announcement, broadly penned in for November, would go ahead.

But the Treasury this afternoon confirmed it had been put back to allow him to focus on dealing with the impact of the second wave of coronavirus on the economy.

Mr Sunak this afternoon confirmed he will  tomorrow outline plans to protect millions of jobs and save thousands of businesses from going under as a new round of coronavirus restrictions threatens to throttle the UK economy.

The Chancellor is to set out his ‘Winter Economy Plan’ in the House of Commons tomorrow amid growing unrest from MPs and businesses over the return of working from home and new restrictions on hospitality firms.

Facing calls for a Furlough 2.0 scheme to be set up he tweeted: ‘As our response to coronavirus adapts, tomorrow afternoon I will update the House of Commons on our plans to continue protecting jobs through the winter. ‘ 

Number 11 said work on the scheme had been taking place in parallel with Budget preparations and the focus has been on jobs to avoid the expected three million unemployed.

The Treasury said: ‘We will always be honest with people about the difficult trade-offs that are involved here.

‘Not between health and the economy, but between keeping people in jobs and helping them find new ones. And between help in the here and now and rebuilding in the future. That’s what people deserve.’

Questions had already been raised over whether the Chancellor’s set piece autumn announcement, broadly penned in for November, would go ahead

What is the German-style system that Rishi Sunak could use in place of the furlough scheme? 

Germany’s has used its Kurzarbeit job subsidy measures during the coronavirus pandemic and has recently extended its use until the end of 2021.

Unlike the British furlough programme, an emergency scheme which pays companies to pay employees not to work, the Kurzarbeit system, which already existed before the pandemic, surrounds short-time working.

It allows employers to reduce employees’ hours while keeping them in a job.

The government pays workers a percentage of the money they would have got for working those lost hours. 

According to the Munich-based Ifo Institute for Economic Research, at the height of the pandemic, half of all German firms had at least some of their staff on the scheme. 

Influential British political figures including former prime minister Gordon Brown have urged the government to bring in such a scheme, or a similar French-style system, after the furlough scheme ends in October.

Last week it was rumoured he was considering postponing the autumn Budget until early next year amid fears over the potential economic impact of a second wave of coronavirus sweeping the country.

It was not due until mid-November at the earliest and Mr Sunak told MPs he has asked the Office for Budget Responsibility (OBR) to prepare an economic forecast – a vital part of the Budget planning – to be published in ‘mid to late November’.

The Chancellor is being urged by business chiefs to ‘get around the table’ and agree new job support measures after Boris Johnson ditched his back to work drive and imposed a range of new coronavirus restrictions. 

Companies fear the new crackdown will deal a hammer blow to already struggling firms especially with the furlough programme closing at the end of October.

But reports suggest Mr Sunak is planning a new scheme to prevent job losses after retail bosses warned that up to a million furloughed workers could be made redundant without another bailout.  

The mooted plans being looked at by the Chancellor would see the Government and firms share the cost of topping up wages for employees who are only able to work part-time because of the pandemic.

It came as the founder of Pret and current boss of Itsu savaged Boris Johnson for ‘spouting Churchillian nonsense’ and his ‘criminal’ six-month work from home bid – as businesses said billions of pounds and millions of jobs would be lost by his plans.

Entrepreneur Julian Metcalfe – who has an estimated £215million fortune – spoke out as the owners of Upper Crust and Caffè Ritazza has said it would lose £1.3billion because of travel curbs and home-working.

It came as pubs warned the PM’s new 10pm curfew posed a risk of calling last orders at beloved bars forever.

And the City of London Corporation said the government needed to find a way to deal with coronavirus that ‘Doesn’t cripple the economy’.

Mr Metcalfe described last night’s speech by the Prime Minister as a ‘man sitting down with his Union Jack talking utter nonsense’.

In a further furious broadside he slated his ‘exaggerated nonsense’ before adding he feared Mr Johnson’s plans would see millions of jobs lost.

Furious Tory MPs have turned on 'authoritarian' Boris Johnson as he ordered the British public to obey his draconian new coronavirus restrictions – or face an economically devastating second national lockdown

Furious Tory MPs have turned on ‘authoritarian’ Boris Johnson as he ordered the British public to obey his draconian new coronavirus restrictions – or face an economically devastating second national lockdown 

It was a far cry from nine years ago when the PM, as then Mayor of London, said he was ‘delighted’ as he appointed Mr Metcalfe as the leader of a taskforce for Croydon following riots in the area. 

Speaking today, the hospitality entrepreneur praised Chancellor Rishi Sunak for his efforts to help struggling businesses, before aiming his focus on the Prime Minister.

Mr Metcalfe said: ‘Unless we get some clarity from the government we end up having to keep many, many – I dread to think how many – people will end up being made redundant, it’s heartbreaking. 

‘It’s hundreds and thousands of hospitality businesses. The knock on effects are on the people who look after them, who service them, who bring them food, and clean them – it’s hundreds of thousands, millions of jobs.

‘What we need is the government, particularly our Prime Minister, this man sitting down with his Union Jack talking utter nonsense, that’s where we need leadership

‘What I would advise our Prime Minister to do, number one is get aligned with his team.

‘To turn to an entire nation and say stay at home for six months and to spout off some Churchillian nonsense about we’ll make it through, it’s terribly unhelpful to this country

‘This talk of six months is criminal, it should be we will review it, we are here to serve you as civil servants. We will review the information and the data each week, each hour, we will behave like responsible people.’

Sir Keir Starmer put the pressure on Mr Johnson on the issue during PMQs today as he said ending furlough meant ‘health measures and economic measures are now dangerously out of sync’.

Mr Johnson replied: ‘Let’s be in absolutely no doubt that the work that this Government has done to protect the economy of this country, to support the jobs of 12 million people through the furlough scheme and overall expenditure of about £160 billion has been unexampled anywhere else in the world.

‘I think he should pay tribute to the Chancellor and his work and we will go forward with further creative and imaginative schemes to keep our economy moving.’ 

The Government’s furlough scheme has helped support almost 10 million jobs during the crisis, covering up to 80 per cent of an employee’s wages up to a maximum of £2,500 a month. 

It is now in the process of being wound down and will formally close at the end of next month after racking up a bill of more than £39 billion.

There were already calls from opposition politicians and business groups for the scheme to be extended even before Mr Johnson announced his latest coronavirus curbs yesterday. 

But the Prime Minister’s decision to encourage workers to work from home where they are able to and impose a 10pm curfew on the hospitality sector, potentially for the next six months, has spooked businesses and accelerated calls for more help to be brought forward. 

Luke Johnson, an entrepreneur and former Pizza Express boss, told BBC Newsnight he believed one million furloughed workers could be axed if the Government does not put in place new financial support measures. 

He said: ‘Rates relief and loans to businesses have made a hell of a difference and if they are extended they will help.

‘There are still three million people probably on furlough and many of those jobs are at risk if lockdowns in some form or fashion continue and severe restrictions remain in place.’ 

He added: ‘It may be that they are simply, all the subsidies are cut off and in which case I would estimate that of the perhaps three million at least a million maybe more will be made redundant because I think those companies will be feeling very demoralised and not confident about investing and rebuilding and possibly they are insolvent therefore they close down altogether.’ 

Bank of England governor Andrew Bailey said yesterday it was time to ‘stop and rethink’ the end of the furlough scheme as he advocated adopting a new more targeted approach.

The Trades Union Congress (TUC), which outlined its furlough replacement proposal last month, said the Government must ‘fast-track a new plan’ to protect jobs.

TUC general secretary Frances O’Grady said: ‘We have published detailed proposals for a new short-time working and upskilling scheme.

‘With the right approach we can stop mass unemployment scarring millions.

‘My message to ministers is clear: let’s get around the table and fast-track a new plan.’

One option reportedly being considered is a scheme similar to Germany’s highly-praised Kurzarbeit, or shorter work-time policy, under which firms can radically cut working hours in economic downturns with the state replacing part of their lost income.

The TUC has proposed a similar scheme that would see workers receive 80 per cent of their salary for the hours they are not in work.

Companies would get a 70 per cent subsidy from the Government, provided they bring back every worker on the scheme for a minimum proportion of their normal working hours.

Another proposal put forward by the CBI business group would see subsidies for firms that can offer staff at last 50 per cent of their normal hours, with the cost for non-working hours shared equally by the company, the Treasury and the employee. 

Dame Carolyn Fairbairn, director general of the CBI, said: ‘A second national lockdown would be devastating for our economy, so it’s right to prioritise bringing infections under control.

‘But there can be no avoiding the crushing blow new measures bring for thousands of firms, particularly in city centres and for our hospitality sector employing over four million people.’

 

 

Read more at DailyMail.co.uk