A Lockdown With Loopholes: England Faces New Virus Restrictions - The New York Times

LONDON — Chocolate shops and stationary stores were busy as usual. Universities held in-person lectures. And workers crowded into some offices and factories, often with nothing more than a bottle of communal hand sanitizer to protect them from the rampant spread of the coronavirus.

In England on Thursday, the first hours of Lockdown 2.0, as local newspapers called it, looked very little like a lockdown at all.

The situation exposed the enormous difficulties of European governments, struck by a second wave of the coronavirus, as they try to put the genie back in the bottle after months of encouraging people to flock back to offices and pubs.

Since the spring, when lawmakers with little dissent ordered people to stay home, the political consensus around lockdown measures has collapsed. As a result, England’s new shutdown rules were shot through with loopholes, and companies openly flouted what relatively lenient restrictions were in place. At the same time, citizens and scientists alike fretted about the virus spreading unchecked for much of the winter.

“It feels very much like a lockdown in name only,” said Steve Gremo, a software developer in Kent, in southeast England. “In March, it seemed like the country came to a complete halt. It was not the same vibe this morning at all.”

A closed cafe in Hackney, east London.Credit...Andrew Testa for The New York Times

The latest shutdown — under which pubs, restaurants and other nonessential shops were supposed to close, but schools, universities and many workplaces were left open — is slated to end on Dec. 2. But many scientists doubt that four weeks of spotty restrictions will be enough to stamp out the virus, or that the government will have done enough by then to revamp its contact tracing system to allow officials to keep track of the virus’s spread for the rest of the winter.

Prime Minister Boris Johnson’s government appeared to suggest on Thursday that some restrictions on working and socializing would remain in place for much longer than it had previously acknowledged.

In announcing the new lockdown measures this weekend, Mr. Johnson said the government would extend its worker support program — under which it pays 80 percent of furloughed workers’ wages — only until the restrictions lapsed on Dec. 2.

The government changed its tune on Thursday, with Rishi Sunak, the chancellor, announcing that the program would continue until the end of March because the economic damage of the pandemic would last beyond the second lockdown.

The opposition Labour Party attacked the government’s hesitation in offering the support, saying it had caused deep certainty for businesses and unnecessary layoffs.

For Mr. Johnson, imposing a second lockdown at all was a dramatic turnaround. Only 10 days before he announced the plan on Saturday night, he had described a national lockdown as “the height of absurdity.”

People take their hour’s allowed exercise, passing the Museum of Liverpool.Credit...Mary Turner for The New York Times

He has continued to face political pressure from libertarian and pro-business lawmakers in his Conservative Party, more than 30 of whom voted against the new restrictions in Parliament on Wednesday. The measures passed with help from Labour lawmakers.

Despite skepticism from scientists, Mr. Johnson insisted on Thursday that the new restrictions would work.

“This is not a repeat of the spring,” he said. “Four weeks is enough for these measures to make a real impact.”

But the busy subways, motorways, shops and workplaces that were in evidence across England on Thursday made plain that companies were reluctant to take the same precautions they did during the first lockdown. A large stationary chain, saying its services were essential, stayed open, raising some eyebrows.

At a chocolate shop north of London, Ashli Long, a supervisor, said schoolchildren and other customers had crowded into the store as usual. A local council official visited on Thursday and said the shop was considered nonessential and therefore needed to close.

But the shop’s owners were planning to resist, Ms. Long said, and open again on Friday. She said she worried about picking up the virus at the shop and bringing it home to her mother, who is being treated for breast cancer.

“We just feel like we don’t have any option right now,” she said. “If the government had set out rules that people could follow from the beginning, then we wouldn’t be in the situation we’re in now.”

Given the crowded streets on Thursday, she added, “I don’t see the virus going away anytime soon.”

People waiting for food outside a cafe in London.Credit...Andrew Testa for The New York Times

The localized restrictions that Mr. Johnson’s government had previously imposed have shown signs of flattening the uptick in infections, scientists said, with reported daily new cases leveling off at around 23,000 in recent days. Still, deaths continued to rise, with nearly 500 recorded across Britain on Wednesday, the highest level since mid-May.

When the coronavirus first surged in the spring, scientists said, the government’s objectives in asking people to stay home were clear: Officials needed time to build up testing and contact tracing programs, learn how to treat the virus and buy enough protective equipment to keep doctors and nurses safe.

But Mr. Johnson’s goals for a second lockdown were narrower, with officials pointing to mass overcrowding in hospitals as inevitable if they did not impose new restrictions.

“I’ve no doubt the lockdown will push cases further downward, but the issue is what is going to happen afterward,” said Paul Hunter, a professor of medicine at the University of East Anglia. Referring to the low infection rates over the summer, he said, “It’s not going to go back to what it was like in August.”

Prof. Hunter said a return to more localized restrictions was likely, though he said lags in imposing them so far this autumn had limited their use. Scientists have urged the government to fix problems with its contact tracing system, known as Test and Trace, which is now overwhelmed with cases.

“Four weeks isn’t enough to fix Test and Trace,” Prof. Hunter said. “That’s just not going to happen.”

Whereas Britons voluntarily stopped socializing before the first lockdown in March, they appeared to pick up the pace before the second, with online restaurant reservations rising this week compared with the same period last year.

Roadways and airports were busy on Wednesday night as some people hurried to second homes or to go on holiday before the restrictions took effect. Some pubs offered deeply discounted beers to drain their stock before lockdown.

The British army arriving at Pontins Holiday Park in Southport, Merseyside which they will use as a base while undertaking mass testing for Covid-19 in the region.Credit...Mary Turner for The New York Times

Many people worried about repeated cycles of lockdowns and reopenings throughout the winter. Only a few months ago, the government had subsidized restaurant meals and begun a campaign encouraging people to return to their offices.

“The government is constantly saying to us, ‘Yes, go back to work, contribute to society, we need to get the economy going,’ and then, ‘Oh no, wait, too much, quick lock down everything again,’” said Mr. Gremo, the software developer. “They’re trying to walk a fine line but instead they’re swinging between either extreme.”

Andy Lewis, who also lives in Kent, said the streets were far busier than they would have been for school drop-offs, essential work and shopping alone.

“It feels like either guidance hasn’t been very clear, or people are just ignoring it,” he said. Referring to a popular coffee shop chain, he added, “This morning I got an email from Costa telling me they are still open for takeaway, yet the government are telling us not to leave the house unless it’s essential?”

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2020-11-05 20:41:00Z
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Covid: Was it right to extend the furlough scheme? - BBC News

As soon as government decided to announce another lockdown in England, it was clear it would need to do something significant to protect jobs. The question was - what?

With many businesses forced to close, and others facing reduced income, there was a risk of rapidly rising unemployment.

The furlough scheme, which had helped to keep unemployment from rocketing during the first lockdown in the spring, was due to end on the very day the new lockdown was announced, 31 October.

The government at first declared a one-month extension - then on 5 November, the Chancellor Rishi Sunak announced that it would be extended to a full five months.

As before, under the scheme, employees stop doing their jobs and the government pays 80% of their wages.

The Chancellor also increased the generosity of support for self-employed workers, to 80% of three months' average profits up to a total of £7,500.

Why did he do it, and was it the right thing to do?

Extending the furlough scheme

A blanket, nationwide furlough was the simplest option. A blanket furlough scheme covering the whole UK puts an end to the piecemeal negotiations with leaders in different parts of the UK about how much support to give businesses facing more restrictions in their areas.

Extending the original furlough scheme would also be easy to implement and understand. Most businesses and workers will already be familiar with it.

The system which runs the programme was kept operational in case of a second wave, Mr Sunak told the House of Commons.

He also justified the decision to extend the scheme for five months as a necessary measure to give businesses clarity to plan over an economic downturn which could be longer and harsher than previously feared.

Mr Sunak told the House: "As we saw from the first lockdown the economic effects are much longer lasting for businesses and areas than the duration of any restrictions."

"I think it's the right thing to do in the current circumstances," said Carsten Jung, Senior Economist at the Institute for Public Policy Research think-tank. "The last thing that was announced was only for one month, and that doesn't give enough certainty to businesses to plan ahead."

Is furlough just delaying the inevitable?

Furlough is meant to keep staff in their jobs temporarily, until better times return. Keeping links with their employers means they can return to work as soon as conditions improve, without the costs and uncertainty of job hunting, recruitment and training.

But critics argue that many of the jobs being expensively preserved by furlough will never come back.

If many more people work from home instead of commuting into cities, for instance, will the jobs making coffee and sandwiches for them return in the same numbers?

Former Sainsbury's chief executive Justin King said on the World at One on BBC Radio 4 that "we will look back on this time as a good chunk of the money spent on furlough as having been spent … just avoiding the inevitable."

Besides being a waste of money, some argue that keeping workers in these 'zombie' jobs stops them from retraining for new, more productive roles, slowing the eventual recovery. They argue that the money could be better spent supporting the incomes of people who do lose their jobs and helping them retrain.

However, many jobs in pubs, restaurants and live entertainment will still be viable once the pandemic is over, said Mr Jung. "We are not expecting the entire hospitality industry to disappear, and those are a lot of the jobs that will be furloughed."

"A lot of the unviable jobs have been shed already," he added.

And it's unlikely a business would keep workers on furlough who they have no prospect of rehiring as they still have to pay national insurance and pension contributions, said Dan Tomlinson, senior economist at the Resolution Foundation. "They still have some skin in the game."

Can we afford to extend the furlough scheme?

One big downside of furlough is the cost - the Resolution Foundation estimates that it could cost around £6bn in the first month, if 5.5 million workers take it up, as the Bank of England predicts.

However, that cost will fall in coming months, as more people return to work when the economy re-opens.

In normal times that would be a huge figure, but not so big in the context of the vast sums spent fighting the coronavirus pandemic.

The government was expected to borrow as much as £391bn this year - more than £1bn a day, according to the Office for Budget Responsibility.

So far there has been little sign that the government is close to the limits on what it can borrow. The rates investors will accept to lend money to the government are still low, despite the big increase in borrowing this year.

As a benchmark, the effective interest rate for lending to the government for ten years is 0.23%, according to Bloomberg. However though the interest rates are low all this extra borrowing is still a burden for future generations to bear.

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2020-11-05 21:39:00Z
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England's lockdown 2.0: Before and after - bbc.co.uk

A second lockdown has begun in England, with four weeks of measures introduced to try and slow the rising number of coronavirus cases.

With people told to stay at home, here's a comparison of the roads and high streets across the country.

The 'before' pictures are from 4 November, the last day before lockdown. The 'after' pictures are from 5 November, the first day of the new measures.

Nine ways this lockdown is different from last time

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2020-11-05 19:32:54Z
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Covid: Rishi Sunak to extend furlough scheme to end of March - BBC News

The furlough scheme will be extended across the UK until the end of March, Chancellor Rishi Sunak has confirmed.

Mr Sunak said the scheme will pay up to 80% of a person's wage up to £2,500 a month. He told the Commons that the government will review the policy in January.

The chancellor said his intention was "to give businesses security through the winter".

"The security we are providing will protect millions of jobs," he added.

The furlough scheme subsidises the wages of people who cannot do their jobs, either because their workplace is closed or because there is no longer enough work for them.

Mr Sunak said it would apply throughout the UK, saying the country had "a Treasury for the whole of the United Kingdom".

• Coronavirus: Am I eligible for the extended furlough scheme?
• Coronavirus: What help are self-employed getting?

As part of the revised scheme, anyone made redundant after 23 September can be rehired and put back on furlough.

What other measures did the chancellor announce?

Mr Sunak also announced billions of pounds of other support for the economy, including more money for self-employed people.

Support through the Self-Employment Income Support Scheme (SEISS) will be increased, with the third grant covering November to January calculated at 80% of average trading profits, up to a maximum of £7,500.

At the same time, the chancellor raised guaranteed funding for the UK's devolved administrations by £2bn to £16bn.

But, many people will remain ineligible for help, including the newly self-employed, those whose pay themselves in dividends, freelancers, and sole traders who previously had a trading profit of more than £50,000.

What does it feel like to be on furlough?

LOUISE SOLOMON

Chef Louise Solomon, 49, is going back on furlough from midnight and says she feels "a huge sense of relief".

She says without the support, she and her wife, a key worker, would only have lasted a few months before things got tight.

"I have card loans, and companies want to be paid regardless. I'd probably have to sell my car and look at what else I could get rid of."

Instead, the furlough extension has given her some breathing space. "It gives you that security - you can sleep at night, knowing money is coming in."

What was the political reaction?

Shadow chancellor Anneliese Dodds accused Mr Sunak of ignoring objections to the government's measures "until the last possible moment".

She pointed out that he had previously "ridiculed" a furlough extension as "a blunt instrument".

But Mr Sunak defended his rapid change of policy, saying: "It is not a weakness to be fast-moving in a crisis, but rather a strength."

Alison Thewliss, the Scottish National Party's Treasury spokesperson at Westminster, described the "long-overdue Tory U-turn" as "welcome", but said it came after six months of sustained pressure from the SNP and devolved governments.

Northern Ireland Finance Minister Conor Murphy welcomed the new support, but said it was "regrettable" that repeated calls to extend the furlough scheme "had not been answered sooner".

What does it mean for the government?

This is a change of heart from ministers - and a really significant one. The chancellor and the prime minister did not want to be here.

The furlough scheme was due to end at the start of November. At the weekend, we found out it would last until 2 December. Now it's staying until the end of March.

The government will argue it is necessary because of a changing health picture. They are clearly worried about the economic outlook.

But political opponents have been calling for this for some time and they believe the chancellor has waited too long.

The Treasury has said anyone who was made redundant after 23 September - when the furlough replacement was announced - can be brought back on to the scheme.

But the government will face accusations it should have done this sooner.

What's the background to the decision?

The latest announcement follows several days of wrangling over the scope and duration of the furlough scheme. It was due to end on 31 October, but was then extended to cover the new four-week lockdown in England.

That announcement at the weekend sparked a row with Scotland and Wales, which argued that it was unfair for the full support package to be available only when England is in lockdown.

They said the scheme should be on offer if they went into their own full national lockdowns later on.

Magnum Photos

The Treasury has not put a cost on extending the furlough initiative until March, as it will depend on the take-up of the scheme,

However, it suggests a rule of thumb of £1bn a month, per million who use it. So three million furloughed workers would cost £3bn a month.

The furlough scheme has cost more than £50bn so far.

What are other people saying?

Paul Johnson, director of the Institute for Fiscal Studies think tank, said the support did not go far enough, particularly for the self-employed, and suggested it had been "dreamt up on the hoof".

Taken aback by ChX statement.

Basically return to March schemes (dreamt up on the hoof in 24 hrs) as if nothing learnt since.

Wasteful & badly targeted for self-employed. No effort at targeting sectors/viable jobs for employees. Big contrast to position just days ago.

— Paul Johnson (@PJTheEconomist) November 5, 2020

However, Howard Archer, chief economic adviser to the EY Item Club, said extending the furlough scheme and the self-employment grant to the end of March provided "important support to the UK economy at a time of heightened uncertainty".

Heathrow airport chief executive John Holland-Kaye said: "Whilst we welcome the extension of the furlough scheme, we are clear that it doesn't go far enough for an aviation sector that has been on its knees since March."

He said the sector was being ignored by the government, adding: "The hundreds of thousands of families across the UK that rely on jobs in aviation to pay the bills have no other choice than to feel very alone."

Mr Sunak's statement comes after the Bank of England said it was pumping an extra £150bn into the economy.

The Bank warned the resurgence of Covid-19 would lead to a slower, bumpier recovery.

What happens next?

Just as the last furlough scheme extended long beyond the date that some businesses were allowed to reopen, so we should not infer that furlough till March means lockdown in England till March.

The current measures for England will be lifted on 2 December, but are likely to be replaced by a form of the regional tier system in place until now.

One of the interesting things to watch in the coming weeks will be the effect of lockdown measures on the infection rates.

The hard-hit hospitality industry, in particular, has argued vehemently that the evidence that pubs, bars and restaurants are a major spreader of infection is very thin.

Does shutting hospitality make a huge difference to the spread of infection? The industry says we are about to find out.

How successful has the furlough scheme been?

The furlough scheme was introduced in March and was originally intended to end in May, but Mr Sunak said at the outset that it would be extended "if necessary".

About 9.6 million people have benefited at one time or another, with a steep take-up in the first few months.

However, some have questioned whether all the money has been wisely spent.

HM Revenue and Customs, which administers the furlough scheme, has suggested that up to 10% of the money delivered by the scheme to mid-August - some £3.5bn - may have been paid out in fraud or error.

It is also unclear whether it has genuinely safeguarded viable jobs or merely delayed the inevitable disappearance of unviable ones.

What is your experience of the furlough scheme? Email haveyoursay@bbc.co.uk.

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2020-11-05 19:20:00Z
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Rishi Sunak faces fury from workers made redundant just before he announced extension to furlough - Daily Mail

'Jobs have been lost for nothing!' Rishi Sunak faces fury from workers made redundant just before he announced extension to furlough scheme - amid questions over why it's continuing until March

• Rishi Sunak announced today that furlough is extended until end of March
• The scheme was due to end October 31, but will continue at 80% of usual wage
• Employees who had been made redundant recently took to Twitter to voice fury  
• Those who were let go after September 23 may be eligible for furlough if rehired
• But many companies are not willing to rehire employees to put them on furlough
• Have YOU been affected? Email emer.scully@mailonline.co.uk

By Milly Vincent and Emer Scully For Mailonline

Published: 17:59 GMT, 5 November 2020 | Updated: 19:55 GMT, 5 November 2020

Hundreds of workers who have recently lost their jobs are furious with Rishi Sunak after he said the furlough scheme will be extended until the end of March.

In a major Government U-turn the Chancellor said the move is needed to quell the economic situation caused by the Covid-19 pandemic.

The job furlough scheme had been due to end on October 31.

Workers will now be able to get furlough at 80 per cent of their usual wage until the end of March, up to a ceiling of £2,500 a month, with employers only having to contribute national insurance and pension costs.

However for some the news has come too late, having already lost their jobs weeks or even days earlier.  

Chancellor of the Exchequer Rishi Sunak giving a statement to MPs in the House of Commons on economic measures for the second national lockdown in England

Deborah Hay, who used to be head of commercial and partnerships at Arena Racing Company at Lingfield Park, told MailOnline she was made redundant as soon as the furlough scheme ended and she can’t see her company taking staff back on now.

‘I’m not criticising the company because it’s not them at all. They were brilliant and then unsurprisingly they’ve had to restructure because there’s no sign of people coming back to race courses.' 

Of the latest announcement, she said: ‘It’s too little too late. I know so many people who have lost their jobs.

‘I can’t imagine they’re going to be taken back on to be refurloughed. It’s too late. 

'There’ll be a lot of people saying “thanks very much a month ago we might have been okay”. It’s bad news for a lot of people.’ 

She said the Government should have warned industry the furlough scheme could be brought back. 

'I’m not sure they could take people back on to refurlough them because they’ve gone through the process of restructuring,' she said of her former employer.

'While I’m still on my notice period it is too late. They have had to restructure the company. If they had known this was happening that might have affected their decision. 

Deborah Hay (pictured), who used to hold a senior role at Arena Racing Company at Lingfield Park, told MailOnline she was made redundant as soon as the furlough scheme ended and she can’t see her company taking staff back on now

Finance expert Martin Lewis of MoneySavingExpert.com confirmed that those who had been made redundant since September 23 could be rehired and then furloughed, if businesses wish

'I get the whole situation, that the Government have had to adapt but it just seems they knew half the hospitality industry would be made redundant. Those warnings have been out for months. 

'So may industries have been affected by it. I can’t imagine any company will completely change their strategy going forward because of the announcement. It’s too late.'

A former head of sales at an events and catering business, who asked not to be named, told MailOnline he was made redundant last Thursday.

His former employer, which has not been named to protect his identity, made 99 of their 101 employees redundant when the furlough scheme ended.

He said: ‘It was expected. The redundancy process was a little long winded and messy but that was because the Government kept changing their programme.

‘We were trying to hold onto jobs for as long as possible but everyone was worried the company would go into liquidation and there’d be no redundancy pay available.

‘I’m one of the few who got three months’ notice but my team are all on one months’ notice and have less wiggle room.’

Mr Cremona said he would get redundancy pay until the end of January but his company had already told staff they would not be put back on furlough.

‘The company have already come back in a general email saying they will not be putting everyone back onto furlough. 

'I don’t understand why. For those on one month notice it would be useful for them. I question how they’ll react to today’s news the furlough scheme will be in place until March. 

'They’ve been hit harder than most because it’s based on mass gatherings. Once they spring back into action they won’t have anyone.’

He said the situation was a ‘bit of a mess’ with his former colleagues feeling ‘general frustration’, adding: ‘We’re in limbo land. Everyone feels so lost and the changes are hard to keep track of.’

Dylan Latham from Birmingham tweeted: 'F***ing joke they have decided to extend furlough now after most people would of been made redundant the end of October due to it ending.'

While Emisen, 21, a voice actor, posted online: 'I'm so mad and devastated right now. I really really am.

'I was made redundant because the business couldn't afford to keep me in, because the furlough scheme was ending... and now they've extended it. what a joke man i'm so mad.'

Nick Rewcastle, a freelance PR from the south-coast, said: 'It's great that furlough is being extended.

'But, what about those of us who were made redundant, went self employed but don't qualify for any support due to the fact we didn't submit tax returns last year as weren't self employed?!' 

Employees who had been made redundant took to Twitter to voice their fury at the government's furlough U-turn

Kai, from Manchester, tweeted: 'This is actually a f***ing joke I was made redundant last month and now they announce a furlough till f***ing March??? MARCH as in for the next 5 MONTHS #furlough #BorisHasFailedTheUK.'

He added: 'I've struggled for 3-4 weeks finding a job without any replies, countless days at home scrolling and countless applications later I'm sick to my teeth of this government.

'With no money left to pay for rent, food, bills how is anyone meant to survive this winter? I swear this is physiological warfare on national scale I'm fed up.'

Gemma Bolderson, from Daventry, tweeted: 'I was made redundant on the 2nd of this month. Really takes the p***. If they'd have decided this sooner, many people would still have jobs.' 

If employees were made redundant after September 23, and were on the payroll on or before October 30, they could be eligible to be rehired and furloughed by their employers, however this is up to the employer.

Finance expert Martin Lewis of MoneySavingExpert.com confirmed: 'If you've been made redundant, you can be rehired and furloughed by your employer if you were employed as of 23 Sept, and on the payroll on or before 30 Oct. 

He added: 'It won't work for many, but many be worth asking for some.'

Ginnie Edwards from London said that asking to be rehired wasn't an option after being made redundant from a job where she had worked for 23 years

Ginnie Edwards, from London, said that asking to be rehired wasn't an option, tweeting: 'I was furloughed, redundant after 23 years with a few phone calls, not one word of thanks from the people I worked my butt off for years, sadly I would prefer to starve then ask for anything, had to beg for holiday pay wanted me to take time off in lieu.'  

How much more cash has Rishi splashed? 

FURLOUGH EXTENSION - £27.5bn-£31bn

Rishi Sunak confirmed today that the furlough scheme will be extended until the end of March, with employers only having to contribute national insurance and pension costs.

The Bank of England estimated today that 5.5million people could be placed on furlough. 

As the Treasury estimates costs of a billion pounds a month for every billion workers on the scheme, that would suggest a bill of £5,5billion a month - or £27.5billion to the end of March.

The Resolution Foundation think-tank says the monthly cost could be even higher at £6.2billion a month - implying a total of £31billion.

SELF-EMPLOYED SUPPORT - £7.3bn

Grants for the self-employed are being increased from 40 per cent of average previous profits to 80 per cent between November and January.

The Treasury says the grants are expected to cost £7.3billion over that period - with another round to come between February and April. 

DEVOLVED FUNDING - £2bn

Up front funding for the devolved administrations will increase by £2billion, calculated based on central government spending.

JOB RETENTION BONUS - ?

Mr Sunak said the scheme offering a £1,000 bonus for firms who bring back furloughed workers beyond February will 'fall away' because of his other announcements.

That could potentially save the Treasury £8billion. However, Mr Sunak promised that another scheme will take its place later. 

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In a Commons statement, Mr Sunak also confirmed that grants for the self-employed will be paid at 80 per cent of average previous profits for November to January, rather than 40 per cent.

But he said the £1,000 job retention bonus for firms that keep staff on will fall away. 

The extension has received a broadly positive response from business and unions, but some financial experts have raised questions about the Chancellor's stance.

Mr Sunak said the Government's highest priority remains 'to protect jobs and livelihoods'.

He had previously extended the furlough throughout November due to the second national lockdown in England.

The Chancellor told MPs: 'We can announce today that the furlough scheme will not be extended for one month, it will be extended until the end of March.

'The Government will continue to help pay people's wages up to 80 per cent of the normal amount.

'All employers will have to pay for hours not worked is the cost of employer NICs and pension contributions.

'We will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more.'

The move comes after the Government continually resisted pressure to extend the furlough scheme, which pays 80 per cent of wages up to £2,500 a month and was originally supposed to end in October.

It is understood the Treasury has not put a cost on extending the furlough initiative through to March as it will depend on take-up levels. But it has so far cost about £5 billion a month.

Federation of Small Businesses national chairman Mike Cherry welcomed the extension, calling it 'bold and much-needed' to provide confidence to firms.

But Paul Johnson, director of the Institute for Fiscal Studies (IFS), tweeted he was 'taken aback' by the Chancellor's move.

He said: 'Basically return to March schemes (dreamt up on the hoof in 24 hrs) as if nothing learnt since.

'Wasteful & badly targeted for self-employed. No effort at targeting sectors/viable jobs for employees. Big contrast to position just days ago.'

The Chancellor defended the Government's actions in the face of the Covid crisis, stating: 'Political opponents have chosen to attack the Government for trying to keep the economy functioning and to make sure the support we provide encourages people to keep working.

'And they will now no doubt criticise the Government on the basis that we have had to change our approach. But to anyone in the real world that's just the thing you have to do when the circumstances change.'

An 11 per cent contraction in GDP this year would be the worst for 300 years - eclipsing the downturn sparked by the First World War and Spanish Flu

GDP is predicted to be 11 per cent lower this year in real terms, according to Bank of England

Some 32 per cent of accommodation and food services businesses had no or low confidence that their businesses would survive the next three months

Mr Sunak also outlined support for the self-employed.

He told MPs: 'For self-employed people, I can confirm the next income support grant, which covers the period November to January, will now increase to 80% of average profits up to £7,500.'

Bank pumps £150bn into economy warning of deeper GDP fall 

The Bank of England pumped another £150billion into the economy as lockdown began today - amid fears that it will send GDP plummeting and destroy jobs.

The Bank has increased its mammoth bond-buying programme to £895billion, warning that UK plc's recovery was already 'softening' before the squeeze was announced on Saturday. Interest rates are being kept on hold at the record low of 0.1 per cent. 

The economy is projected to shrink by 2 per cent between October and December, but the Monetary Policy Committee says the UK is likely to dodge a double-dip recession.

GDP is now predicted to be 11 per cent lower this year in real terms, worse than the 9.5 per cent it suggested in August. The Bank's central expectation is that the economy will not regain its level from last year until the start of 2022.

The MPC said unemployment is set to peak at 7.75 per cent in the second quarter of next year - with government bailouts pushing back the worst of the impact from the 7.5 per cent high the Bank had anticipated in this quarter. The current rate is 4.5 per cent, suggesting another million people face losing their jobs.

An eye-watering 5.5million are set to be on furlough this month, according to the report - with 2.5million still needing the support schemes until April. 

Speaking at a press conference after announcing the move, Bank governor Andrew Bailey said: 'We are here to do everything we can to support the people of this country – and we'll do it and will do it quickly.'

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Extending the self-employed grant will cost an additional £2.8 billion from November through to January, taking the cost of the scheme to £7.3 billion.

Mr Sunak bowed to pressure from the devolved administrations and said 'upfront guaranteed funding' for them will increase by £2 billion.

He said: 'I also want to reassure the people of Scotland, Wales and Northern Ireland. The furlough scheme was designed and delivered by the Government of the United Kingdom on behalf of all the people of the United Kingdom, wherever they live.

'That has been the case since March, it is the case now and will remain the case until next March.

'I can announce today that the upfront guaranteed funding for devolved administrations is increasing from £14 billion to £16 billion.'

But Labour's shadow chancellor Anneliese Dodds said the Chancellor is 'always a step behind'.

She told MPs: 'Businesses and workers have been pleading for certainty from this Government, but the Chancellor keeps ignoring them until the last possible moment after jobs have been lost and businesses have gone bust.

'Now when the lockdown was announced, the Prime Minister said furlough would be extended for a month - five hours before that scheme was due to end.

'Two days later, realising the self-employed had been forgotten, there was a last-minute change to the self-employed scheme.

'And now, further changes. The Chancellor's fourth version of his winter economy plan in just six weeks. The Chancellor can change his mind at the last minute, but businesses can't.

'We need a Chancellor who is in front of the problems we face, not one who is always a step behind.'

Scotland's Finance Secretary said the extension to the UK Government's furlough scheme is 'positive but long overdue'.

Kate Forbes said: 'I welcome the Chancellor's positive, but long overdue announcement that the Job Retention Scheme will be extended until March 2021.

'We have repeatedly urged the UK Government to safeguard jobs by guaranteeing that this support will be available for as long as employers need it.'

Welsh economy minister Ken Skates welcomed Mr Sunak's decision to extend the scheme, saying it is what Wales has been calling for 'for some time'.

Tory MP Mel Stride, chairman of the Commons Treasury Committee, expressed concerns over self-employed workers who will miss out on improved measures for freelancers.

The Treasury Select Committee has been calling on the Government to provide extra support for more than a million self-employed workers who pay themselves in dividends.

The Monetary Policy Committee said unemployment is set to peak at around 7.75 per cent in the second quarter of next year - with government bailouts pushing back the worst of the impact from the 7.5 per cent high the Bank had anticipated in this quarter

The Bank of England's figures suggest that the UK will be harder hit than the US and Eurozone this year

Mr Stride told BBC Radio 5 Live: 'I remain very concerned that this large group of people have not had the support that I and the committee believe that they should have received and should be receiving going forward, so it's very unsatisfactory.'

TUC general secretary Frances O'Grady said the move was a 'positive step' but called on the Chancellor to do more to help the self-employed.

She said: 'He must offer help to those self-employed workers who are falling between the cracks.

'We also need an urgent boost to both sick pay and universal credit. No-one should be plunged into financial hardship if they have to self-isolate or if they lose their job.'    

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2020-11-05 17:59:00Z
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