Published:Thursday, 24 Sep 2020 09:09
Chancellor Rishi Sunak will later unveil a plan aimed at minimising further unemployment as stricter Covid-19 restrictions come into force.
The new measures are expected to replace the furlough scheme, which is set to expire next month.
In July, around five million workers were still receiving some or all of their income through the scheme, many in the hospitality sector.
Pubs and restaurants have warned they will be hit hard by new restrictions.
From Thursday, hospitality venues in England will have to shut at 22:00 BST as the government tries to control the spread of the coronavirus.
Scotland is introducing similar measures, with pubs and restaurants having to close at 22:00 BST from Friday, while in Wales restrictions are limited to stopping alcohol sales at 22:00 from Thursday.
“Lots of businesses will not survive this and we are going to see more and more people lose their jobs,” said Kate Nicholls, chief executive of trade body UKHospitality.
At around 11:45, the chancellor is expected to address the Commons to unveil plans that the government hopes will stem those job losses.
The Treasury said the chancellor had been “preparing contingency plans over the summer in case the pandemic required it”.
It is understood Mr Sunak has been considering different forms of wage subsidy and will announce more financial help.
He is also thought to be looking at options including a salary top-up scheme, similar to those already operating in France and Germany.
The prime minister said Mr Sunak was working on “creative and imaginative” solutions.
Although the Treasury has declined to comment, possible ideas are thought to include allowing firms to reduce employees’ hours while keeping them in a job, with the government paying part of the lost wages.
Mr Sunak also announced on Wednesday that the Autumn Budget would be scrapped this year because of the pandemic.
Paul Johnson, director of the Institute for Fiscal Studies think tank, said he expected a “big rise” in unemployment when the existing furlough scheme expires at the end of next month.
“We’ve already seen something like a reduction of nearly three quarters of a million… in terms of the number of people on payroll and then we’ve got at least another two million or so on furlough not working,” Mr Johnson told the BBC’s Today programme.
“Some of those will likely be supported by this new scheme but not all of them and that implies, I suspect, by the end of the year that we will have something like… two million fewer than we had at the beginning of the year, although oddly that doesn’t seem to be translating at the moment into the official unemployment figures.”