Local furlough scheme will pay two thirds of wages in firms forced to shut

Rishi Sunak is set to announce a local furlough scheme today in which the government will subsidise two thirds of the wages of workers in pubs, restaurants and other businesses that are forced to close to stop the spread of coronavirus.

Pubs and restaurants in northern England will be shut next week in an effort to stop hospitals being overwhelmed by the rising number of Covid-19 cases.

A new system of restrictions divides England into three tiers of escalating severity. Merseyside and other parts of northern England will be placed in the highest tier as some hospitals start to run out of dedicated coronavirus beds. Businesses such as pubs, restaurants and cafés will be forced to close.

The local furlough scheme will remain in place for as long as businesses are locked down. The scheme is significantly more generous than the successor to the wage support scheme announced by the chancellor last month, which subsidises a fifth of part-time wages. But it falls short of demands by unions that the government cover 80 per cent of people’s wages, as it did when introducing the original furlough scheme, which ends on October 31.

One minister told The Times that there has been frustration in government at the failure of the Treasury to bring forward the measures sooner. They argued that the package should have been ready two weeks ago alongside the chancellor’s winter economic plan because it was obvious that the additional funding would be needed.

Downing Street hinted at financial help and did not rule out a new furlough scheme for the worst affected industries and per-head funding for local authorities. “Protecting jobs, particularly the two million in the hospitality sector, has been a priority throughout our response to the pandemic,” the prime minister’s spokesman said.

Steve Rotheram, metro mayor for the Liverpool city region, said that financial support on a “similar scale” to the original furlough scheme was needed. “If it was right then, it certainly is now — so we need to be seeing local furlough schemes, business grants and financial support for the self-employed and those who cannot work from home,” he said. “Otherwise, the money spent earlier in the year to protect jobs and businesses earlier in the year will have been wasted.”

Frances O’Grady, general secretary of the TUC, said: “In areas facing high infection rates and further business closures, the government must act to preserve jobs and stop family firms going to the wall through a new local furlough scheme.”

Jake Berry, a Tory former minister, is among those who have been critical of the government’s approach. Mr Berry, MP for Rossendale & Darwen, said: “It is vital that, whatever system we have, it is backed by strong Treasury support to ensure that areas in the north of England that are subject to enhanced restrictions can survive economically at the end of this lockdown.”