Chancellor to unveil wage bailout to help millions through coronavirus crisis

The government will offer unprecedented support for millions of workers to help Britons hit by the coronavirus crisis under radical plans to be unveiled by the Chancellor on Friday. 

Two measures under discussion include subsidising wages by freezing income tax payments during the crisis and giving National Insurance tax breaks.

Rishi Sunak, putting the finishing touches to the package, has also been in discussions about paying workers a weekly subsidy in what would be the biggest intervention by the British state in the economy since the Second World War. 

It comes as officials were drawing up plans to impose further restrictions on movement in London if people continue to ignore Government pleas to stay at home, which could see thousands of businesses shut down. Mr Sunak is expected to give companies and the self-employed a National Insurance holiday after the Government published legislation allowing him to do so.

The Chancellor will set out the measures at a press conference with Boris Johnson on Friday afternoon after the Prime Minister urged businesses to “stand by your employees because we will stand by you”.

The Prime Minister said it was likely to take 12 weeks to “turn the tide” of coronavirus and suggested life may still not have got back to normal by the summer. 

He added: “I want to say something about the timescale. I think we can turn the tide within the next 12 weeks, and I’m absolutely confident that we can send coronavirus packing in this country – but only if we all take the steps that we have outlined.” 

He also suggested the Government could soon be testing 250,000 people per day for the virus, up from fewer than 10,000 at the moment.

It came as, in a message on Thursday, the Queen urged the country to pull together and said: “Our nation’s history has been forged by people and communities coming together to work as one, concentrating our combined efforts with a focus on the common goal.”

But there were more chaotic scenes at supermarkets, with fights breaking out in queues and staff complaining about being abused as panic-buying caused tempers to flare.

Meanwhile, the Government moved closer to calling up military reservists in the fight against coronavirus. James Heappey, the Minister for the Armed Forces, established the legal framework for allowing reservists to be used to bolster the 20,000 soldiers already on standby to provide vital support to the police, NHS and other sectors.

There was fresh concern over school exam grades as parents and students went another day without clarity over how qualifications will be awarded and universities warned that the admission system should not have to rely on predicted grades.

Italy’s death toll overtook China’s as the number of deaths in Britain from the virus rose to 144, with confirmed cases up to 3,269.

The Church of England, which has already banned regular services, recommended that weddings should be attended by just five people – the bride, groom, minister and two witnesses.

The Bank of England made its second emergency intervention in days as it cut interest rates to 0.1 per cent – the lowest since it was founded in 1694 – and pumped £200 billion of cash into the economy.

Mr Sunak met business groups and trade unions on Thursday. They urged him to “pause” a range of taxes including National Insurance, income tax and VAT, some payments for which are due shortly. A source close to the discussions said: “Businesses may be told: ‘You don’t have to pay income tax for X amount of time.”

That would effectively leave the government picking up some or all of the wage bills for companies that keep staff on during the crisis as, by the freezing of income tax, companies would still be able to give employees the same amount of take home pay but would save money by sending less to the Treasury. 

On Thursday night, the Prime Minister said the Government had learnt from the criticism of the 2008 bank bailouts and added: “This time, we’re going to make sure that we look after the people who really suffer from the economic consequences of what we’re asking them to do, and we’ll be directing our support to them, looking after the people first.”

A source in the meeting said other measures discussed included “the use of National Insurance Contributions and income support schemes”.

On Thursday, the Government published its emergency Coronavirus Bill, which includes powers to make changes to National Insurance without the need for further legislation. By cutting NI, the Government would be able to help employees, employers and the self-employed.

Writing for The Telegraph, the Labour MP Peter Kyle, who sits on the Commons business select committee, said using the National Insurance system to put money back into people’s pockets will “enable Government to shoulder a share of wages during the crisis”.

A Treasury source said officials would be finalising the measures on Friday and added: “It’s a movable feast. We are working up a whole range of options.” The package will be designed to “protect people’s jobs and protect their wages”, the source said, and will add to the £350 billon stimulus for businesses the Chancellor announced on Tuesday.

Greg Clark, the former Business Secretary, spoke in favour of giving people a tax break through their payroll systems on Thursday.

He said: “All employers have an account with HMRC to pay tax for employees though Pay As You Earn [..] Instead of firms paying PAYE to the government, that flow should now be reversed – with the nation paying the wages of people for the next few weeks if, and only if, they continue to employ their staff.”

Meanwhile, an economic thinktank called for a maternity pay-style system for workers who are sent home as a way of avoiding mavoidass redundancies.

The Resolution Foundation said the Government should fund businesses to put staff on paid leave with two-thirds of their normal salary for six months to “prevent mass job losses”. This would cost £8 billion if applied to a million workers.

The so-called “statutory retention pay”, modelled on statutory maternity leave, could also be introduced on a smaller scale for about half the cost to the Treasury, with workers receiving £151 a week for up to six months. Treasury minister John Glen told MPs: “We are talking about an unprecedented crisis – and therefore we will need to take unprecedented measures.”

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