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PM briefing: On-trade shut down, plus 80% wage guarantee for employees furloughed and VAT deferment

Published:  20 March, 2020

The UK Prime Minister has announced that all UK pubs, bars and restaurants must close from tonight (Friday 20 March), with theatres, cinemas and gyms also to close as soon as they reasonable can.

The announcement, delivered at the now daily Downing Street briefing, marked a rapid shift from Boris Johnson’s Thursday statement, when he said there were no plans to enforce closure if public followed government advice on how to prevent the spread of coronavirus.

Meanwhile, Chancellor Rishi Sunak also announced further measures to support employees and company, with a new Coronavirus Job Retention Scheme, whereby employers will be able to contact HMCR 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.

The scheme, explained Sunak, is aimed at supporting as many jobs as possible, across all sectors, so that “workers can retain their jobs, even if employers cannot afford to pay them”, with 80% of wages paid (up to £2,500 a month) for three months, and a possibility of an extension “if necessary”.

The Chancellor said he was “placing no limit” on the amount of funding available for the scheme, with the first grants to be paid before the end of April,

“We are looking to keep people on the payroll”, said the Chancellor, stressing, “please look very carefully at [this scheme] before making any decisions to lay people off – stand behind our workers”.

In a hint at how long the crisis may last, with a prediction of some degree of isolation and social distancing measures possibly being needed for up to 12 months, the New Business Interruption Loan Scheme, announced in last week’s Budget (and then upped), had its interest free period extended from six to 12 months.

Noting that many businesses are “already hurting now”, Sunak added to the raft of measures already introduced, including loans, grants and tax cuts, with further cash flow support through the tax system.

“To help businesses pay people and keep them in work I am deferring the next quarter of VAT payments, that means no business will pay any VAT from now until the end of June”, he said, adding that businesses will have from now until the end of the financial year to repay that bill.

“The government is doing its best to stand behind you, and I am asking you to do your best to stand behind our workers,” said Sunak.