Rishi Sunak has announced a multibillion-pound package of support for the economy in an attempt to avoid mass redundancies this winter.
The Chancellor’s measures include wage subsidies for part-time workers, VAT cuts for the hospitality sector and more loans for struggling businesses.
Mr Sunak warned he “cannot save every job” and “cannot save every business”, but promised to throw money behind roles that can be kept going “through the difficult winter months”.
He also defended bringing the furlough scheme, which has protected almost a million jobs in Scotland, to an end – arguing it would be “fundamentally wrong to hold people in jobs that only exist inside the furlough”
“We need to create new opportunities and allow the economy to move forward”, he said.
Productive meeting and pleased to have support for our Winter Economy Plan from @cbicarolyn of @CBItweets and @FrancesOGrady of @The_TUC ahead of my statement to the House of Commons shortly. pic.twitter.com/vXZEjhRgeI
— Rishi Sunak (@RishiSunak) September 24, 2020
Under his winter economy plan, there will be a new jobs support scheme, an extension of the self-employment income support scheme and a 15% VAT cut for the hospitality and tourism sectors.
Businesses will also be given the opportunity to delay repayment of bounceback loans under a “pay as you grow” scheme.
Mr Sunak said: “The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery.
“Our approach to the next phase of support must be different to that which came before.
“The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve.”
He added: “Above all, we need to face up to the trade offs and hard choices coronavirus presents and there has been no harder choice than to end the furlough scheme.
“The furlough was the right policy at the time we introduced it; it provided immediate, short-term protection for millions of jobs through a period of acute crisis.
“But as the economy reopens it is fundamentally wrong to hold people in jobs that only exist inside the furlough.”
Shadow chancellor Anneliese Dodds said the delay in the introduction of the support scheme will have impacted the confidence of businesses.
Responding to Mr Sunak’s statement in the Commons, she said: “I’ve called for the introduction of a system of targeted wage support 40 times. That call has been rebuffed by this government 20 times. It’s a relief this government have U-turned now.
“But we must be open and honest. That delay in introducing this new scheme will have impacted on businesses’ confidence.
“I know that from talking to them, and I’m sure members on the opposite benches know that from talking to businesses in their constituencies.”
SNP Treasury spokeswoman Alison Thewliss agreed with Ms Dodds, saying: “He is coming very late in the day to do this, and it is of little comfort to those who have already lost their jobs due to the impending ending of the furlough scheme.”
The package has been broadly welcomed by MPs and those in the business community, however.
North-east MP Andrew Bowie said the measures “delivered for Scotland”, adding: “There will be more jobs support for employees and the self-employed, which helps keep people in viable jobs for a longer term, rather than just waiting for redundancy. The status quo of furlough was not an option.
“The extension of 5% VAT and payment deferrals are particularly important for hospitality and tourism businesses in my constituency and across the north east.”
Dame Carolyn Fairbairn, CBI Director-General, said: “These bold steps from the Treasury will save hundreds of thousands of viable jobs this winter.
“It is right to target help on jobs with a future, but can only be part-time while demand remains flat. This is how skills and jobs can be preserved to enable a fast recovery.
“Wage support, tax deferrals and help for the self-employed will reduce the scarring effect of unnecessary job losses as the UK tackles the virus. Employers will apply the same spirit of creativity, seizing every opportunity to retrain and upskill their workers.
“The Chancellor has listened to evidence from business and acted decisively. It is this spirit of agility and collaboration that will help make 2021 a year of growth and renewal.”