Sunak plans 80% furlough wage extension in local lockdown areas

The UK chancellor, Rishi Sunak, is poised to announce an extension of the job support scheme, as the government scrambles to contain the economic fallout from draconian new Covid restrictions planned for the north of England.

The chancellor is expected to say that businesses temporarily shut down as a result of coronavirus curbs will receive taxpayer support to fund up to 80% of their staff’s wages. It comes just three weeks after he announced his winter economic plan.

Details will not be announced until later on Friday, but it appears similar to the furlough scheme Sunak was adamantly opposed to extending.

The health secretary, Matt Hancock, is expected to impose strict new lockdown rules next week that could see pubs and restaurants closed in the hardest-hit areas.

The new job support scheme will apply nationwide, government sources say – but the hastily planned announcement comes after the mayor of Greater Manchester, Andy Burnham, threatened a legal challenge to new restrictions if they came without “proper compensation and a local furlough scheme for staff”.

A Treasury spokeswoman said: “The chancellor will be setting out the next stage of the job support scheme later today, that will protect jobs and provide a safety net for those businesses that may have to close in the coming weeks and months.”

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The announcement comers amid growing alarm that hospitals in the worst-hit parts of England could run out of Covid beds within weeks amid sharply rising numbers of patients in the north-west and north-east of England. Six hundred and nine coronavirus patients were admitted to hospital on Thursday, up a fifth in a day, and a further 17,540 cases and 77 deaths were reported.

The shadow chancellor, Anneliese Dodds, said: “The chancellor could have changed course on Monday, but he offered nothing. On Tuesday, we dragged his minister to parliament – but he had nothing to say either. Media briefings suggest he’s now ready to tear up his winter economy plan before the autumn is even out. This is serial incompetence at the heart of government.

“The chancellor’s constant flip-flopping on furlough is putting 900,000 jobs at risk. If he doesn’t act now, Britain risks an unemployment crisis greater than we have seen in decades – and Rishi Sunak’s name will be all over it.”

Civic leaders in northern England said they would strongly oppose any fresh restrictions that did not come with significant financial support for businesses and residents. They have called for a local furlough scheme on a similar scale to the original plan in which the state paid 80% of workers’ wages, warning that tens of thousands of jobs would be lost before Christmas without sufficient support.

Burnham said he would use “whatever means I can” to challenge the government to help people “because otherwise they are going to suffer real hardship this winter – we are going to see businesses failing”, he told the BBC’s Question Time.

MPs representing constituencies in the Midlands and north of England – where case numbers are highest – were told on Thursday that the number of coronavirus patients in intensive care in the region would surpass the April peak if infections continue rising at the current rate.

In a briefing chaired by England’s chief medical officer, Chris Whitty, they were also told that bars, pubs and restaurants accounted for 41% of cases in which two or more under-30s had visited the same venue in the week before testing positive. This fell to a quarter of infections across all age groups, the MPs were told, according to early research from Public Health England.

The briefing was seen as paving the way for the imminent closure of the hospitality industry in Merseyside and other hard-hit parts of the north of England.

Gillian Keegan, the skills minister, said on Question Time: “This is serious – it is getting out of control, and we have to do something to bring it back under control.”

Keegan admitted that the government’s communication needed to be “much clearer”. She said it was “probably very frustrating if leaks are made or there is speculation in the press, and I don’t know which of those it is.

“But clearly we have to do something if we’re going to bring those cases back under control.”

Prof John Edmunds, a member of the government’s Scientific Advisory Group for Emergencies (Sage), said coronavirus was “holding a gun” to Boris Johnson’s head over the restrictions being introduced, adding that the nation faces an anxious wait to see the full impact on the NHS.

He said: “In the north of England now, we are not that far away from the health service being stretched. Because even if we turn the epidemic around now, infections that occur today won’t go to hospital for another week or two.”