Chancellor statement to the house – Furlough extension
Statement, as delivered by Chancellor Rishi Sunak in Westminter on 5 November 2020:
Mr Speaker,
On Monday, the Prime Minister set out the action we need to take between now and the start of December to control the spread of coronavirus.
In response, we’re providing significant extra support to protect jobs and livelihoods in every region and nation of the United Kingdom:
An extension to the Coronavirus Job Retention Scheme;
More generous support to the self-employed and paying that support more quickly;
Cash grants of up to £3,000 per month for businesses which are closed, worth over £1 billion every month;
£1.6 billion for English councils to support their local economy and local healthcare response;
Longer to apply for our loan schemes and the Future Fund;
The chance to top-up Bounce Back Loans;
And an extension to the mortgage payment holidays.
All on top of more than £200 billion of fiscal support since March.
This statement follows the Bank of England’s monetary policy decisions earlier today, meaning all economic and monetary institutions are playing their part.
As you would expect, the Governor and I are in constant communication as the situation evolves.
Our responses are carefully designed to complement each other and provide certainty and support to people and businesses across the UK. The Bank’s forecasts this morning show economic activity is supported by our substantial fiscal and monetary policy action.
And the IMF just last week described the UK’s economic plan as “aggressive”, “unprecedented”, successful in “holding down” unemployment and business failures and “one of the best examples of coordinated action globally”.
Mr Speaker,
Our highest priority remains the same: to protect jobs and livelihoods.
That’s why we’ve already decided to extend the Job Retention Scheme to December.
But people and businesses will want to know what comes next; how long we plan to keep the scheme open, and on what terms.
They want certainty.
The government’s intention is for the new health restrictions to remain only until the start of December.
But, as we saw from the first lockdown, the economic effects are much longer lasting for businesses and areas than the duration of any restrictions.
And as the Bank of England have said this morning, “the economic recovery has slowed”, and the economic risks are “skewed to the downside”.
Given this significant uncertainty, a worsening economic backdrop, and the need to give people and businesses security through the winter, I believe it is right to go further.
So we can announce today that the furlough scheme will not be extended for one month – it will be extended until the end of March. The government will continue to help pay people’s wages, up to 80% of the normal amount.
All employers will have to pay for hours not worked is the cost of Employer NICs and pension contributions.
We’ll review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more.
Of course, as the furlough itself is now being extended to the end of March, the original purpose of the Job Retention Bonus to incentivise employers to keep people in work until the end of January – obviously falls away.
Instead, we will redeploy a retention incentive at the appropriate time.
And for self-employed people, I can confirm the next income support grant which covers the period November to January, will now increase to 80% of average profits, up to £7,500.
Mr Speaker,
I also want to reassure the people of Scotland, Wales and Northern Ireland. The furlough scheme was designed and delivered by the Government of the United Kingdom on behalf of all the people of the United Kingdom – wherever they live.
That has been the case since March; it is the case now; and will remain the case until next March.
It is a demonstration of the strength of the Union – and an undeniable truth of this crisis – we have only been able to provide this level of economic support because we are a United Kingdom.
And I can announce today that the upfront guaranteed funding for the devolved administrations is increasing from £14 billion to £16 billion. This Treasury is, has been, and will always be, the Treasury for the whole of the United Kingdom.
Mr Speaker,
I know that people watching at home will have been frustrated by the changes the government has brought in during the past few weeks. I have had to make rapid adjustments to our economic plans as the spread of the virus has accelerated.
So I’d like to take this opportunity to explain how and why this has happened.
During the summer, as we began slowly unlocking it was our hope the country would continue to be economically open, albeit with local restrictions being put in place as and when needed.
We knew there would likely be a resurgence in the spread of the virus, but with increased NHS capacity and Test and Trace, our belief was we would be able to stay ahead of the virus.
On this basis we designed an economic approach which continued providing wage support to people, incentivised businesses to retain staff beyond the end of the furlough scheme and created new job creation and training schemes, such as Kickstart.
All built to support an economy that was broadly open but operating with restrictions and overall lower demand.
At the time this approach was not Government acting alone. Our proposals secured wide ranging support, from the TUC to the CBI.
It was their hope, as it was ours, that the public health situation would allow us to keep businesses and workplaces open.
The virus however, continued to spread. Localised restrictions were having an impact, and so we intensified this approach and added further areas.
As these restrictions intensified, the economic impact, particularly on industries such as the hospitality sector, was significant.
So in response, we altered our approach to wage support, making it much more generous to employers and in turn protecting jobs.
We also introduced a range of grants to businesses, whether open or closed, to help them meet their fixed costs.
And additional funding for local authorities to respond to specific local economic challenges.
But again, the virus continued to spread, but more quickly.
And so we arrive at last week, when the government’s scientific and medical advisers presented data which showed that R is greater than 1 in all parts of the UK, that the NHS was at risk of being overwhelmed in a matter of weeks and the likely resultant loss of life that would accompany such an event.
The only viable solution left to protect our NHS was the re-imposition of temporary significant enhanced restrictions in England, in addition to those in Wales, Northern Ireland and Scotland.
And so, given these changed public health restrictions and the economic trauma they would cause in job losses and business closures I felt it best to extend the furlough scheme, rather than transition at that precise moment to the new Job Support Scheme.
Now political opponents have chosen to attack the government for trying to keep the economy functioning and to make sure the support we provide encourages people to keep working.
And they will now, no doubt, criticise the government on the basis we have had to change our approach.
But to anyone in the real world, that’s just the thing that you have to do when circumstances change.
We all hope for the best, but make sure we plan for any eventuality.
We can reintroduce the furlough now only because we kept the system on which it is based operational, because there was always the possibility that we would be back in this situation.
I’ll leave it to the people of this country to decide whether they believe the Government is trying its best to support people through an unprecedented crisis.
To decide whether it is a good or bad thing to alter our economic plans as the health restrictions we face change.
What I know is that the support we are providing will protect millions of jobs.
What I know is that it is never wrong to convey confidence in this country and our economy through our words and action.
And what I know is today’s announcement will give people and businesses up and down our country immense comfort over what will be a difficult winter.
And I commend this Statement to the House.
PM Boris Johnson later gave a statement at the coronavirus press conference:
Good evening everyone,
Across the whole United Kingdom, people are engaged in a huge joint effort to put the coronavirus back in its box. Throughout the pandemic, this government has done whatever it takes to protect lives and livelihoods – in England, Scotland, Wales and Northern Ireland.
We have put in place an unprecedented package of economic support, protecting the wages and jobs of millions of people.
We have built the largest testing capacity in Europe, with 32 million tests conducted so far and over half a million tests now available every day across the UK.
We have ensured that, as we head into winter, the NHS has at its disposal over 30,000 ventilators and billions of items of Personal Protective Equipment, most of it now manufactured here in the UK.
Across the whole of the UK, we have a shared goal – to suppress the virus, ensure the NHS is not overwhelmed, and in doing so to save lives.
The UK Government and the devolved administrations are working together on a joint approach to the Christmas period, because all of us want to ensure families can come together wherever they live.
The challenges we face are significant across the U.K.
The average number of new cases each day is now 22,398, that’s up from 9,716 a month earlier.
There are now 12,320 patients in hospital, up from 2,602 a month earlier.
1,142 patients are now in mechanical ventilation beds, up from 369 a month earlier.
Sadly 492 deaths were reported yesterday. The weekly average number of deaths each day is now 295, up from 53 a month earlier.
That’s why new restrictions are in place in each part of the UK.
In England, from today, we are once again asking you to stay at home.
As I explained on Saturday you can only leave home for specific reasons: for work if you can’t work from home, for education, and for essential activities and emergencies.
The full rules, all of the details, are available at gov.uk/coronavirus and on the NHS Covid-19 app – please log on to see what you can and can’t do.
I know how tough this is:
For staff in the NHS and care homes, who are facing a tough winter on the frontline.
For families, who can’t meet in the way they would want to.
For businesses, forced to shut just as you are getting back on their feet.
I know many of you are anxious, weary and quite frankly fed up with the very mention of this virus
But I want to assure you this is not a repeat of the spring.
Schools, universities and nurseries are all staying open.
And these measures though they are tough are time-limited.
The advice I have received suggests that four weeks is enough for these measures to make a real impact.
So these rules will expire, and on 2 December we plan to move back to a tiered approach.
There is light at the end of the tunnel.
We have better treatments and techniques to take care of those in hospital, thanks largely to the ingenuity of British scientists.
Rapid testing is being rolled out on a massive scale – with city-wide testing starting tomorrow in Liverpool.
I am hugely grateful to the people of Liverpool for their participation in this pilot. I hope that by working together, we can get that great city on top of the virus.
More broadly, there is also the very real chance of safe and effective vaccines.
So taking those things together, these scientific advances can show us the way ahead.
And in the meantime, the government will continue to support people affected by these new restrictions.
As you know, we have protected almost 10 million jobs through furlough, and as the Chancellor announced earlier today, we are now extending the scheme through to March.
We are also extending our support for the self-employed, so that the next payment increases to 80 per cent of average profits.
We’re providing cash grants for businesses who are closed, worth more than £1 billion every month.
We are giving £1.1 billion to Local Authorities in England to support businesses.
And a further £2 billion of funding is guaranteed for Scotland, Wales and Northern Ireland.
As we face these challenges together, we must look after those in most need.
As of September we have helped over 29,000 rough sleepers off the streets, two thirds of whom are now in settled accommodation.
Today we’re announcing a further £15 million to help councils offer safe accommodation for people who are sleeping rough or at risk of becoming homeless. This programme will help areas that need additional support most during the restrictions and throughout the winter.
These are difficult times.
And while it pains me to have to ask once again for so many to give up so much, I know that, together, we can get through this.
So please, for the next four weeks, stay at home, protect the NHS and save lives.
