Pubs, restaurants and other companies struggling with coronavirus restrictions will receive more support from the government, Chancellor of the Exchequer Rishi Sunak said.
Support will be available to companies across England, whether or not they are in areas of tighter coronavirus restrictions, Sunak said.
He also announced further expansion in state-funded grants for firms hit by Tier 2 restrictions across England, with the Treasury now pledging to pay at least 62% for hours not worked.
Companies will only need to contribute 5% to affected worker's pay, compared to the previous 33%.
A new grants scheme will be introduced for businesses hit by Tier 2 restrictions, even if they are not legally required to close.
Sunak said the Treasury was “providing enough funding to give every business in hospitality, leisure & accommodation a grant worth up to £2,100 every month Tier2 restrictions apply”, rising to £3,000 for those that have been legally required to close.
These grants will be retrospective grants, so businesses can backdate them to August if they’ve been operating in areas with enhanced restrictions since then, he said.
For businesses legally required to close, employers will pay staff two-thirds of their normal salary where they can’t work for a week or more, with the government covering 100% of those costs.
The government will also double self-employed grants from 20% to 40%, meaning the maximum grant will go up from £1,875 to £3,750.
Manchester mayor Andy Burnham, having spent several days battling with Downing Street over better support for locked-down business in the region, tweeted: “Why on earth was this not put on the table on Tuesday to reach an agreement with us? I said directly to the PM that a deal was there to be done if it took into account the effects on GM businesses of three months in Tier 2.”
Under the Job Support Scheme launched last week, replacing March's nationwide coronavirus furlough scheme, the government had promised to pay 22% of a worker’s wages if they work a third of their hours, but in areas of higher restrictions the state can provide up to 60% of an employee’s wages.
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The Job Support Scheme, which was launched last week, will only fund employees who work at least a third of their normal hours.
Under this scheme, the one third of hours worked is paid for by the company and of the remaining two thirds of the worker’s usual hours, the employer pays one third and the government pays one third, meaning the employee receives 77% of their usual pay.
Currently under Tier 2 rules, hospitality companies are allowed to remain open but only serve customers at the same table from the same household, unless they are outside.
Companies in Tier 2 areas are entitled to lesser financial support than those in Tier 3 areas.
Len McCluskey, general secretary of trade union Unite, said the government had been too slow to do more to provide support people through the pandemic.
“The adjustment to the Job Support Scheme was urgently needed and ought to make it easier for struggling employers to hold onto staff
“However, it does nothing to help those sectors hardest hit and which are not in Tier 2 – aviation, aerospace and hospitality. These sectors are struggling and desperately need help that reflects the true picture nationally.”
As governments in France and Germany have recognised, surviving on 60% of their wages was not possible for many people, he said: “Banks and landlords will expect full payment and the cost of feeding a family has not been reduced.
“The support announced today ought to have come weeks ago. The chancellor has at last moved but who knows how many workers were sent to the dole along the road to get here.”