Government raises Universal Credit and puts ‘no limit’ on new job retention scheme

Business support

A new ‘coronavirus job retention scheme’, announced today, will be backdated to 1 March, providing grant to cover “most of the wages of people who are not working but are furloughed and kept on payroll rather than being laid off”.

Any employer, “small or large, charitable or non-profit”, will be eligible for the scheme, which will be open for an initial minimum term of three months and would be extended further if necessary, Mr Sunak said.

He said that he was placing “no limit” on the amount of funding available for the scheme, and added that it would be open “within weeks”.

The grants will cover 80 per cent of the salary of retained workers, up to a total of £2,500 per worker a month.

Mr Sunak also announced that a previously announced business interruption scheme for small and medium-sized businesses, to be facilitated by the British Business Bank, would now be interest-free for 12 months, rather than six.

Finally, Mr Sunak said that VAT payments would be deferred for the next quarter until the end of June, with businesses having “until the end of the financial year” to repay those bills.

“That is a direct injection of over £30bn of cash to businesses, equivalent to 1.5 per cent of GDP,” Mr Sunak said.

Mr Sunak said that the measures were “unprecedented” in the history of the British state.

“Our plan for people’s jobs and incomes will protect people’s jobs, offer more generous support to those who are without employments, strengthen the safety net for those who work for themselves and help people stay in their homes.”

Sector reaction

A representative for London Councils, which yesterday called on ministers to prevent homelessness during the crisis through a number of methods, including raising the Local Housing Allowance (LHA), has welcomed the government’s move today.

The spokesperson said: “The government has made the right call. Raising Local Housing Allowance is a big step forward in preventing homelessness.

“Boroughs are concerned the combination of COVID-19’s economic impact and London’s severe housing pressures still threatens a spike in homelessness – but this decision will help keep many Londoners secure in their homes.

“In London, we face the worst homelessness crisis in the country and inadequate LHA rates have been a key factor behind growing numbers of private sector tenants falling into arrears and losing their homes.”

Richard Watts, chair of the Local Government Association’s (LGA) resources board, said: “The LGA has long called for a lifting of Local Housing Allowance rates to address the growing gap between income and rents. It is great the chancellor has acted today.

“Restoring LHA rates to cover at least the lowest third of market rents will deliver more of the security that tenants need during this coronavirus crisis and support households who need help to meet their housing costs.

“Alongside the additional resources that have been announced for Universal Credit and the welfare benefits system, this will play an important role in relieving pressure on local services and hardship support at this crucial time.”