Rishi Sunak will on Friday be forced to open the Treasury cheque book again to support companies told to close in local lockdowns, little more than two weeks after he set out his “winter economic plan”.
Amid claims the government had turned its back on parts of northern England, which are set to face tougher lockdown restrictions in the coming days, the chancellor will set out details of a new local furlough scheme.
Keir Starmer, Labour leader, accused the government of “losing control” of the fight against coronavirus, while leaders of northern cities claimed they had been left in the dark by Boris Johnson’s government.
“People aren’t asking for miracles — they just want to know that the prime minister has a plan and a strategy in place,” Sir Keir wrote in the Daily Telegraph.
“However, what we have seen in recent weeks is a government that has lost control: lost control of its message; lost control of testing; and — crucially — lost control of the virus.”
Mr Sunak set out a plan for supporting jobs through the winter on September 24, including a “job support scheme” under which the government would pay up to 22 per cent of wages of part-time workers.
The chancellor said he stood ready to do more, but the bad news on the spread of the virus has forced him into action more quickly than he had hoped. On Thursday night Mr Sunak agreed with Mr Johnson on a local furlough scheme to support staff of businesses forced to close.
“The chancellor will be setting out the next stage of the job support scheme later today that will protect jobs and provide a safety net for those businesses that may have to close in the coming weeks and months,” a Treasury official said.
The new furlough scheme will be deployed as tougher new local restrictions are announced next week, covering much of the north of England. The Times said it would cover two-thirds of wages.
That would be less than the 80 per cent of wages covered by the Treasury when the furlough scheme was first unveiled in the spring. The programme, which has been gradually wound down, ends on October 31. In October the government pays 60 per cent of wages up to a cap of £1,875.
The Trades Union Congress said: “In areas facing high infection rates and further business closures, the government must act to preserve jobs and stop family firms going to the wall through a new local furlough scheme — building on the existing national job retention and job support schemes, with help for the self-employed too.
“That’s the right response to this renewed public health emergency in parts of the UK.”
Sir Keir wrote: “I understand the need for local restrictions. We have long argued that the only way we can curb the spread of the virus and keep the economy going is by having a targeted response that can tackle local outbreaks and reduce the infection rates.
“However, something is going seriously wrong with the government’s approach at the moment. Out of the 20 areas of the country that have been in restrictions for at least two months, 19 have seen the infection rate go up. That is a sign of significant failure.”