Chancellor offers to cover up to 80% of wages

The Chancellor has announced that the Government will cover up to 80% of wages of people who cannot work over the next three months.

Folder with label saying 'salaries'


Employers will be able to continue to pay staff who are not needed to work during the next three months due to the coronavirus outbreak up to 80% of their wages, the Chancellor has announced.

Rishi Sunak said that the Government would pay grants covering 80% of employees’ salaries up to 2,500 pounds a month if they are unable to work due to the coronavirus.

He added that self employed people would be eligible for Universal Credit at a rate equivalent to Statutory Sick Pay and self assessment payments will be deferred to January 2021. VAT payments for this quarter will also be postponed until June.

Universal Credit will be increased by up one thousand pounds a year and working families tax credit will also be raised.

Childminders and self employment

Neil Leitch, CEO of the Early Years Alliance, welcomed the announcement and said: Neil Leitch, chief executive of the Early Years Alliance, said: “This is an incredibly significant announcement and will hugely welcomed by childcare providers preparing to close – either partially or fully – next week.

“With many still working out exactly how many children will be eligible for care as of Monday, and in turn, how many staff they will need, it is incredibly reassuring to know that providers will be able to continue to pay staff who are not needed to work during this period up to 80% of their wages for the next three months.

“This, alongside the postponement of VAT payments until June, will make a huge difference to helping providers weather this storm and the government should be commended for taking these important steps.

“That said, we recognise that self-employed childminders will not be enjoying the same feeling of relief that the rest of the sector will and so we will continue to push for more support for this vital part of the childcare sector.”

Indeed, within hours of the announcement nearly 7,000 childminders wrote to their local MPs calling for greater wage support for the childminding sector.

Many childminders are facing full or partial closures as of Monday following the government’s call on all childcare providers, schools and other educational settings to close to all but the children of key workers and vulnerable children in a bid to slow the spread of coronavirus.

IPSE (the Association of Independent Professionals and the Self-Employed) has warned that the measures announced by Sunak leave the self-employed “trailing far behind employees”.

IPSE has said that, although there is unprecedented support for employees, the Government has done “nowhere near enough” for the self-employed. It has urged the Government to provide better support by creating a Temporary Income Protection Fund to provide temporary, targeted grants to replace a proportion of the income lost by freelancers.

Lawyers Leigh Day are expected to prepare legal proceedings against the government on behalf of the Independent Workers Union of Great Britain in the wake of the Chancellor’s statement. The union claims that the policy is “discriminatory” against self-employed workers, who have been left with a much smaller safety net than has been offered to employees.

A survey of recruitment firms has found that almost 90% have already seen up to half of their contractors laid off during the coronavirus pandemic. The Association of Professional Staffing Companies (Apsco) survey also found that 76% of respondents expect that up to 50% of contractors will be terminated by the end of the month, while 67% report that permanent hiring within their sector had almost completely dried up.

Government response to pressure

The Government is reported to be considering paying self-employed workers a proportion of their income based on several years of tax returns, a similar model to that used in Norway and Denmark while the Resolution Foundation think-tank is recommending that the government guarantee 80% of the incomes of the self-employed, based on average incomes over the past three years.

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