Rishi Sunak expected to boost job support scheme for Tier 2 lockdown areas

Rishi Sunak is expected to boost the government’s job support scheme (JSS) to cover workers in Tier 2 lockdown areas whose employers are forced to close.

Restaurants, pubs and bars have warned that up to 750,000 jobs could be lost when the government’s furlough programme, brought in at the start of the pandemic, ends next month.

Under current plans, Tier 2 businesses are not eligible for extra government support available for Tier 3 areas, despite restrictions on household mixing hitting their bottom lines.

But the chancellor is now expected to unveil new support for those businesses facing tier two restrictions, in his fourth economic update since the start of the pandemic.

The weaker JSS that will replace furlough has a much narrower focus and lower levels of support than the system it replaces. 

Meanwhile representatives of major trade unions, as well as the UK’s big five employer organisations, have been summoned to the treasury ahead of the announcement— with a number of measures said to be being considered to salvage jobs across the board amid surging unemployment.

Earlier this week, Treasury minister Jesse Norman told the commons that the way the government offered support to business was “evolving”.

Asked about firms impacted by tier 2 regulations, he said “We are acutely aware of the financial costs on those businesses, as we are of those on businesses that have been forced to close, and that is why we have put in place an evolving and comprehensive programme of support.”

It comes after ministers were warned three quarters of a million jobs could be lost if greater support was not provided to the sector.

Trade bodies UKHospitality, the British Institute of Innkeeping and the British Beer & Pub Association said a survey of members had found 76 per cent of their businesses were loss making even before the tier system was introduced.

“Without urgent sector-specific support for our industry, massive business failure is imminent and hundreds of thousands of jobs will be lost around Christmas from a sector that was in growth at the beginning of this year, as well as in the supply chain that supports them.” a joint spokesperson for the trade bodies, said on Monday.

However while offering up new supports for firms, the chancellor is expected to paint a gloomy picture for the nation’s economy after months of heavy spending to mitigate the effects of the virus.

His economic update will come just a day after the Office for National Statistics announced  UK’s national debt hit a record £2.06 trillion at the end of September, up £259.6 billion in six months.

Borrowing was pushed up to 103.5% of gross domestic product (GDP) after the public sector borrowed around £36.1 billion in September - pushing the debt to GDP ratio to the highest levels since 1960.

This was £28.4 billion more than the same month a year ago and the third-highest month of borrowing since records began in 1993, officials added.

At the end of September there was £1.741 trillion of central government bonds, or gilts, in circulation to prop up the falling tax take and cover the huge expenditure related to Covid-19 spending.