Government unveils vast coronavirus bailout to fund 80% of workers' wages

Chancellor Rishi Sunak unveiled a huge coronavirus bailout to cover the wages of millions of workers and stop firms going bankrupt.

He said the government will cover 80% of salaries up to £2,500 a month, with workers staying on the books of employers as Britain braced for the next stage of its battle to defeat the virus.

£30billion of VAT bills will be deferred, and there will be a £7billion boost to welfare to support the most vulnerable, in what is the biggest single government intervention in the economy since WWII.

“For the first time in our history the government is going to step in and help pay people’s wages,” Mr Sunak said

Boris Johnson said the government would temporarily support workers “directly in a way government never has done before”.

Mr Johnson made another set of announcements to increase social distancing
(Image: POOL/AFP via Getty Images)

Any employer will be eligible to apply to HMRC to pay most of the wages of people who are furloughed during the crisis.

The Chancellor called the scheme the “Coronavirus job retention scheme”.

Government grants will cover 80% of the salary of retained workers up to a total of £2,500 a month.

“Any employer in the country, small or large, charitable or non profit, will be eligible for the scheme,” he said.

The grant will be provided by the government and and there is “no limit” on the amount of money payable through the scheme.

It will cover the cost of wages backdated to March 1 and be open initially for “at least” three months.

The Chancellor said he will extend the scheme for longer if necessary.

Asked if the 80% wage guarantee will cover zero-hour contracts, Chancellor Rishi Sunak said: “It covers everybody who is on the PAYE system through a company.

“We will be publishing detailed guidance shortly.
“But depending on your particular employment contract it might be different depending on who you are.

“Zero hours covers a variety of situations, but it may well be you are on a PAYE scheme and have a set of regular earnings and it will be covered depending on your particular circumstance.

“I can’t generalise for every single person’s employment status, but in general our desire here is to cover as broad a range of people as possible.”

Universal Credit will also be raised by £1,000 a year as part of a major coronavirus rescue package.

The “standard allowance” – £323.22 a month for single people and £507.37 a month for couples – will be raised for the next 12 months.

Working Tax Credit will be raised by the same amount.

Chancellor Rishi Sunak said the move would “benefit 4million of our most vulnerable households”.

The government will also suspend the minimum income floor in Universal Credit “for everyone effected by the economic impact of coronavirus”.

This means a self-employed person with zero income will be able to claim Universal Credit at a similar rate to someone who is unemployed.

It comes after thousands of families and companies warned that they face collapse if they do not get urgent help to cover pay and expenses, with many having seen their income collapse virtually overnight.

It comes after Boris Johnson announced forced wide scale closures of pubs, restaurants and clubs.

Mr Johnson: “Following agreement between all the four nations of the UK, we are collectively telling – telling – cafes, bars, pubs restaurants to close tonight as soon as they reasonably can and not to open tomorrow.

“To be clear, they can continue to provide take-out services. We’re also telling nightclubs, theatres, cinemas, gyms and leisure centres to close on the timescale.”

Boris Johnson announced widespread closures
(Image: POOL/AFP via Getty Images)

Rishi Sunak has been under pressure from Labour, unions and even senior Tory MPs to do more to help workers and the stalling economy weather the crisis.

The Chancellor has been locked in talks with unions and business to draw up the package to bail out workers.

The Prime Minister earlier this week urged businesses to “stand by your employees” but critics warn the government has been too reliant on the goodwill of firms to do the right thing after it pledged cash for companies without conditions about retaining staff.