UK government to pay wages of virus-hit workers

The British government on Friday said it would help cover the wages of people hit by the coronavirus outbreak as it tightened restrictions to curb the spread of the disease.

In an extraordinary intervention, Finance Minister Rishi Sunak said he would pay 80 percent of salaries of staff who could no longer work because of the virus fallout.

“Today I can announce that, for the first time in our history, the government is going to step in and help to pay people’s wages,” he said.

He also announced a deferral in sales tax payments — worth £30 billion ($34.8 billion, 32.7 billion euros) — extended an existing business loan scheme and boosted welfare payments.

“Unprecedented measures, for unprecedented times,” he told a joint news conference with Prime Minister Boris Johnson at Downing Street.

At the same time, Johnson announced a tightening of the “social distancing” measures introduced earlier this week to stem the outbreak.

As the British death toll rose to 177, he told bars, restaurants, nightclubs, theatres and leisure centres to shut as soon as possible.

“We need to keep people apart,” Johnson said, adding that the situation would be kept under monthly review.

He acknowledged how much of a change in behaviour this would require, but said people — particularly younger people who may feel they are less at risk from coronavirus — needed to listen.

“I do accept that what we’re doing is extraordinary, we’re taking away the ancient inalienable right of freeborn people of the United Kingdom to go to the pub,” he said.

But he said that “if people comply, then we will not only save thousands of lives, but we will come out of this thing all the faster”.

Virus war economy
The Conservative government had earlier this week announced a £330-billion ($385 billion, 361-billion-euro) package of government-backed loans to help businesses hit by the outbreak.

But with reports that the hospitality and other industries were beginning to shed jobs, trade unions, politicians and business groups demanded more help to address the crisis.

Adam Marshall, director of the British Chambers of Commerce, said the new measures would give firms “desperately needed breathing room at this critical moment” but said more may yet be needed.

Frances O’Grady, head of the Trades Union Congress umbrella body, welcomed the moves.

“Employers can now be confident they’ll be able to pay their wage bills. They must urgently reassure staff that their jobs are safe,” she said.

Sunak said that he hoped to release grants within weeks to cover 80 percent of salaries of retained workers up to a total of £2,500 ($2,900) a month.

The payments will be backdated to March 1 and be available for about three months, although he did not rule out extending the scheme.

He increased welfare allowances, including by promising £1 billion in extra housing benefit to help people struggling to pay the rent.

Kallum Pickering, senior economist at the Berenberg investment bank, said: “The UK is now running a ‘virus war’ economy. The usual rules do not apply”.