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UPDATE 6-UK's Sunak to throw lifeline to some furloughed workers

Wed, 23rd Sep 2020 08:00

* Sunak to set out future of furlough around 1130 GMT on
Thursday

* Crisis scheme that supported 9 mln jobs due to end next
month

* Future support to be aimed at workers who return part-time
- BBC
(Adds finance ministry source comment)

By David Milliken and William James

LONDON, Sept 23 (Reuters) - British finance minister Rishi
Sunak will announce new plans to support jobs on Thursday, as
fears mount of a surge in unemployment when an existing 52
billion pound ($66 billion) support programme comes to an end in
just over a month.

Sunak has ruled out a wholesale extension of the Coronavirus
Job Retention Scheme, which supported 8.9 million private-sector
jobs at its peak in May, but a growing second wave of COVID-19
cases has piled pressure on him to announce a replacement.

"As our response to coronavirus adapts, tomorrow afternoon I
will update the House of Commons on our plans to continue
protecting jobs through the winter," Sunak said in a statement
on Wednesday.

Sunak will not now hold a full budget later this year, as
previously intended, due to the economic uncertainty created by
rising COVID-19 cases, which this week showed their biggest
daily increase since May.

"No one wanted to be in this situation but we need to
respond to it," a finance ministry source said, adding that
Sunak hoped to offer reassurance to workers and businesses.

On Tuesday, the government dealt a blow to the hospitality
sector by ordering bars and restaurants to shut by 10 p.m.,
halving the maximum number of people allowed at weddings, and
backtracking on calls for employees to return to offices, rather
than working from home.

Curbs on socialising were likely to last another six months,
Prime Minister Boris Johnson warned in a national address.

The BBC reported that Sunak would announce more financial
help for people and businesses where jobs were at risk, probably
through the form of wage subsidies for staff who return
part-time, but would not target help at specific sectors.

Sunak previously said he would be "creative" in finding a
way to support employment but has repeatedly stressed it will
not be possible to save every job.

Johnson, facing a wave of questions in parliament about the
future of the scheme earlier on Wednesday, said the government
would do its "level best" to protect workers.

MILLIONS RECEIVING SUPPORT

The most recent official figures show around 5 million
people were still relying on the job support programme for some
or all of their income at the end of July, concentrated in the
hospitality and entertainment sectors.

The Bank of England forecast last month that Britain's
unemployment rate would jump to 7.5% by the end of the year if
there were no replacement for the scheme, up from 4.1% in the
three months to July.

Business leaders, trade unions and the opposition Labour
Party have all urged the government for weeks to continue
support in some form and avoid a cliff-edge end to assistance.

Britain's furlough scheme, which paid up to 80% of
employees' wages for staff who are not working, is due to expire
on Oct. 31, sooner than similar programmes in other countries.

The Confederation of British Industry has called for Sunak
to adopt a programme similar to Germany's 'Kurzarbeit', which
tops up the wages of staff whose hours are reduced.

Employers would cover the full wage bill for the hours staff
worked, which would need to be at least half their normal hours.
But the government would pay a third of the wage for hours not
worked, while employers would also cover a third.

Jonathan Portes, professor of economics at King's College
London and a former chief economist at Britain's Department for
Work and Pensions, said this approach made sense for sectors
such as hospitality that were operating below capacity.

But for sectors that looked set to stay closed - such as
theatres and sporting venues - other assistance would be needed
to ease furloughed staff into new jobs, he said.
($1 = 0.7846 pounds)
(Additional reporting by Kate Holton, Michael Holden and Sarah
Young; Editing by Stephen Addison, Alex Richardson and Rosalba
O'Brien)

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