The Government will pay 80 per cent – up to £2,500 – towards the wages of employees that are not working because of the global coronavirus pandemic.
Chancellor Rishi Sunak announced the support for businesses at the Government’s daily coronavirus briefing, at which Boris Johnson announced the closure of pubs, clubs, and restaurants.
Mr Sunak says the funding will be provided through HMRC grants and would help protect employees who are not currently working due to the on-going Covid-19 situation.
He said: “I have a responsibility to make sure that we protect, as far as possible, people’s jobs and incomes.
“Today I can announce that in the first time of our history, the Government is going to step in and help pay people’s wages.
“We’re setting up a new coronavirus job retention scheme. Any employer in the country small or large, charitable or non-profit, will be eligible for the scheme.
“Employers will be able to contact HMRC for a 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.
“Government grants will cover 80% of the salary of retained workers up to a total of £2,500 a month – that’s just above the median income.
“Our planned economic response will be one of the most comprehensive in the world”.
He added: “To all those at home, right now anxious about the days ahead, I say you will not face this alone.”
Mr Sunak said the coronavirus business interruption loan scheme will now be interest free for 12 months rather than the six months previously announced.
“And thanks to the enormous efforts of our critical financial services sector those loans will now be available starting from Monday.
“Any employer in the country, small or large, charitable or non-profit, will be eligible for the scheme.”
Mr Sunak promised further measures next week to ensure larger and medium sized businesses will be able to access the credit they need.
The Chancellor also said the next quarter of VAT payments will be deferred until the end of June in a cash injection of £30 billion.
Mr Sunak said: “To help businesses pay people and keep them in work I’m deferring the next quarter of VAT payments, that means no business will pay any VAT from now until the end of June.
“And you’ll have until the end of the financial year to repay those bills. That’s a direct injection of over £30 billion of cash to businesses equivalent to 1.5% of GDP.”