Coronavirus: UK workers to get two-thirds of wages if firms told to shut

9 October 2020 | Finance

The government is to pay two-thirds of workers’ wages at businesses forced to close during new coronavirus lockdowns, the chancellor has announced.

Rishi Sunak said the government would subsidise pay by providing grants to all UK companies forced to shut their doors – likely to be pubs, bars and restaurants – due to the fresh controls imposed in Scotland and expected to be put in place in England next week. There will also be new grants paid direct to businesses to help them meet other costs.

The shift in government policy comes as ministers prepare to follow Scotland with tougher new local restrictions, starting in the north, where Covid-19 cases have dramatically increased in recent weeks. It also comes as official figures showed that more than one in 10 workers in Britain – almost 3m people – were still furloughed in early September.

Quick guide

UK retail and hospitality job cuts on back of Covid-19 crisis

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Whitbread – 6,000 jobs

22 September: Whitbread, which owns the Premier Inn, Beefeater and Brewers Fayre chains, said it would cut 6,000 jobs at its hotels and restaurants, almost one in five of its workforce

Pizza Express – 1,100 jobs
7 September: The restaurant chain confirms the closure of 73 restaurants as part of a rescue restructure deal.

Costa Coffee – 1,650 jobs
3 September: The company, which was bought by Coca-Cola two years ago, is cutting up to 1,650 jobs in its cafes, more than one in 10 of its workforce. The assistant store manager role will go across all shops.

Pret a Manger – 2,890 jobs
27 August: The majority of the cuts are focused on the sandwich chain’s shop workers, but 90 roles will be lost in its support centre teams. The cuts include the 1,000 job losses announced on 6 July.

Marks & Spencer – 7,000 jobs
18 August: Food, clothing and homewares retailer cuts jobs in central support centre, regional management and stores.

M&Co – 400 jobs
5 August: M&Co, the Renfrewshire-based clothing retailer, formerly known as Mackays, will close 47 of 215 stores.

WH Smith – 1,500 jobs
5 August: The chain, which sells products ranging from sandwiches to stationery, will cut jobs mainly in UK railway stations and airports. 

Dixons Carphone – 800 jobs
4 August: Electronics retailer Dixons Carphone is cutting 800 managers in its stores as it continues to reduce costs.

DW Sports – 1,700 jobs at risk
3 August: DW Sports fell into administration, closing its retail website immediately and risking the closure of its 150 gyms and shops.

Marks & Spencer – 950 jobs
20 July: The high street stalwart cuts management jobs in stores as well as head office roles related to property and store operations.

Ted Baker – 500 jobs
19 July: About 200 roles to go at the fashion retailer’s London headquarters, the Ugly Brown Building, and the remainder at stores.

Azzurri – 1,200 jobs
17 July: The owner of the Ask Italian and Zizzi pizza chains closes 75 restaurants and makes its Pod lunch business delivery only

Burberry – 500 jobs worldwide
15 July: Total includes 150 posts in UK head offices as luxury brand tries to slash costs by £55m after a slump in sales during the pandemic.

Boots – 4,000 jobs
9 July: Boots is cutting 4,000 jobs – or 7% of its workforce – by closing 48 opticians outlets and reducing staff at its head office in Nottingham as well as some management and customer service roles in stores.

John Lewis – 1,300 jobs
9 July: John Lewis announced that it is planning to permanently close eight of its 50 stores, including full department stores in Birmingham and Watford, with the likely loss of 1,300 jobs.

Celtic Manor – 450 jobs
9 July: Bosses at the Celtic Collection in Newport, which staged golf’s Ryder Cup in 2010 and the 2014 Nato Conference, said 450 of its 995 workers will lose their jobs.

Pret a Manger – 1,000 jobs
6 July: Pret a Manger is to permanently close 30 branches and could cut at least 1,000 jobs after suffering “significant operating losses” as a result of the Covid-19 lockdown

Casual Dining Group – 1,900 jobs
2 July: The owner of the Bella Italia, Café Rouge and Las Iguanas restaurant chains collapsed into administration, with the immediate loss of 1,900 jobs. The company said multiple offers were on the table for parts of the business but buyers did not want to acquire all the existing sites and 91 of its 250 outlets would remain permanently closed.

Arcadia – 500 jobs
1 July: Arcadia, Sir Philip Green’s troubled fashion group – which owns Topshop, Miss Selfridge, Dorothy Perkins, Burton, Evans and Wallis – said in July 500 head office jobs out of 2,500 would go in the coming weeks.

SSP Group – 5,000 jobs
1 July: The owner of Upper Crust and Caffè Ritazza is to axe 5,000 jobs, about half of its workforce, with cuts at its head office and across its UK operations after the pandemic stalled domestic and international travel.

Harrods – 700 jobs
1 July: The department store group is cutting one in seven of its 4,800 employees because of the “ongoing impacts” of the pandemic.

Harveys – 240 jobs
30 June: Administrators made 240 redundancies at the furniture chain Harveys, with more than 1,300 jobs at risk if a buyer cannot be found.

TM Lewin – 600 jobs
30 June: Shirtmaker TM Lewin closed all 66 of its outlets permanently, with the loss of about 600 jobs.

Monsoon Accessorize – 545 jobs
11 June: The fashion brands were bought out of administration by their founder, Peter Simon, in June, in a deal in which 35 stores closed permanently and 545 jobs were lost.

Mulberry – 470 jobs
8 June: The luxury fashion and accessories brand is to cut 25% of its global workforce and has started a consultation with the 470 staff at risk.

The Restaurant Group – 3,000 jobs
3 June: The owner of dining chains such as Wagamama and Frankie & Benny’s has closed most branches of Chiquito and all 11 of its Food & Fuel pubs, with another 120 restaurants to close permanently. Total job losses could reach 3,000.

Clarks – 900 jobs
21 May: Clarks plans to cut 900 office jobs worldwide as it grapples with the growth of online shoe shopping as well as the pandemic.

Oasis and Warehouse – 1,800 jobs
30 April: The fashion brands were bought out of administration by the restructuring firm Hilco in April, with all of their stores permanently closed and 1,800 jobs lost.

Cath Kidston – 900 jobs
21 April: More than 900 jobs were cut immediately at the retro retail label Cath Kidston after the company said it was permanently closing all 60 of its UK stores.

Debenhams – 4,000 jobs
9 April: At least 4,000 jobs will be lost at Debenhams in its head office and closed stores after its collapse into administration in April, for the second time in a year.

Laura Ashley – 2,700 jobs
17 March: Laura Ashley collapsed into administration, with 2,700 job losses, and said rescue talks had been thwarted by the pandemic.

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The new plan launching on 1 November, said the chancellor, is an expansion of the job support scheme announced last month, in his winter economy plan, which was designed to replace the furlough measures which protected more than 9m jobs in the summer.

The furlough programme closes at the end of October, and the chancellor has repeatedly insisted it would not be extended. However, the rapid rise in infections has forced the government to draw up new lockdown measures which could riskhundreds of thousands of jobs without new financial support from the taxpayer.

Friday’s expansion of the new job support scheme effectively replicates the furlough under a new name, but with some differences.

Q&A

Major UK job cuts announced so far

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The coronavirus lockdown has prompted some of the UK’s most prominent companies to announce large-scale job losses. The aviation, automotive and retail sectors have been among the worst hit, as businesses adjust to dramatically reduced revenue projections.

While the government’s job retention scheme has so far protected millions of jobs, fears are mounting that unemployment will rise as the scheme begins to be phased out from August.

Since lockdown began on 23 March, some of the UK’s largest companies have announced plans to cut a total of 60,000 jobs globally, many of which will fall in the UK.

M&Co. – 400 jobs
5 August: M&Co., the Renfrewshire-based clothing retailer, formerly known as Mackays, will close 47 of 215 stores.

WH Smith – 1,500 jobs
5 August: The chain, which sells products ranging from sandwiches to stationery, will cut jobs mainly in UK train stations and airports. 

Pizza Express – 1,100 jobs
4 August: The restaurant chain plans the closure of 70 restaurants as part of a rescue restructure deal.

Dixons Carphone – 800 jobs
4 August: Electronics retailer Dixons Carphone is cutting 800 managers in its stores as it continues to reduce costs.

DW Sports – 1,700 jobs at risk
3 August: DW Sports fell into administration, closing its retail website immediately and risking the closure of its 150 gyms and shops.

Marks & Spencer – 950 jobs
20 July: The high street stalwart cuts management jobs in stores as well as head office roles related to property and store operations.

Ted Baker – 500 jobs
19 July: About 200 roles to go at the fashion retailer’s London headquarters, the Ugly Brown Building, and the remainder at stores.

Azzurri – 1,200 jobs
17 July: The owner of the Ask Italian and Zizzi pizza chains closes 75 restaurants and makes its Pod lunch business delivery only

Burberry – 500 jobs worldwide
15 July: Total includes 150 posts in UK head offices as luxury brand tries to slash costs by £55m after a slump in sales during the pandemic.

G4S – 1,150 jobs
13 July: The security company G4S plans to make 1,150 workers redundant as it scales back its struggling cash handling business and contends with pandemic-hit cash usage.

Boots  4,000 jobs
9 July: Boots is cutting 4,000 jobs – or 7% of its workforce – by closing 48 opticians outlets and reducing staff at its head office in Nottingham as well as some management and customer service roles in stores.

John Lewis  1,300 jobs
9 July: John Lewis announced that it is planning to permanently close eight of its 50 stores, including full department stores in Birmingham and Watford, with the likely loss of 1,300 jobs.

Celtic Manor  450 jobs
9 July: Bosses at the Celtic Collection in Newport, which staged golf’s Ryder Cup in 2010 and the 2014 Nato Conference, said 450 of its 995 workers will lose their jobs.

DHL  2,200 jobs
7 July: Some 2,200 UK logistics workers involved in making Jaguar Land Rover vehicles are set to lose their jobs. About 40% of DHL’s staff employed on the contract for the carmaker. 

Reach  550 jobs
7 July: The owner of the Daily Mirror, Daily Express and Daily Star newspapers is to cut 550 jobs, 12% of its workforce, amid reduced demand for advertising in its titles.

Pret a Manger  1,000 jobs
6 July: Pret a Manger is to permanently close 30 branches and could cut at least 1,000 jobs after suffering “significant operating losses” as a result of the Covid-19 lockdown

Casual Dining Group  1,900 jobs
2 July: The owner of the Bella Italia, Café Rouge and Las Iguanas restaurant chains collapsed into administration, with the immediate loss of 1,900 jobs. The company said multiple offers were on the table for parts of the business but buyers did not want to acquire all the existing sites and 91 of its 250 outlets would remain permanently closed.

Arcadia  500 jobs
1 July: Arcadia, Sir Philip Green’s troubled fashion group – which owns Topshop, Miss Selfridge, Dorothy Perkins, Burton, Evans and Wallis – said in July 500 head office jobs out of 2,500 would go in the coming weeks.

SSP Group  5,000 jobs
1 July: The owner of Upper Crust and Caffè Ritazza is to axe 5,000 jobs, about half of its workforce, with cuts at its head office and across its UK operations after the pandemic stalled domestic and international travel.

Accenture  900 jobs 
1 July: The New York-listed consultancy firm is making 900 job cuts at all levels across 11,000 UK employees in the face of lower demand for its services.

Harrods  700 jobs
1 July: The department store group is cutting one in seven of its 4,800 employees due to the “ongoing impacts” of the pandemic.

Airbus  1,700 jobs
30 June: The European planemaker announced plans to cut 15,000 jobs, including 1,700 in the UK, as it warned the coronavirus pandemic had triggered the “gravest crisis” in its history.

Harveys  240 jobs
30 June: Administrators made 240 redundancies at furniture chain Harveys with more than 1,300 jobs at risk if a buyer cannot be found.

TM Lewin  600 jobs
30 June: Shirtmaker TM Lewin closed all 66 of its outlets permanently with the loss of about 600 jobs.

Royal Mail  2,000 jobs
25 June: Royal Mail has announced a cost-cutting plan that will involve slashing about 2,000 jobs, or one in five of its near-10,000 management roles.

Swissport  4,500 jobs
24 June: Swissport, which handles passenger baggage and cargo for airlines, has begun a consultation process to make 4,556 workers redundant, more than half of its 8,500 UK workforce.

Jaguar Land Rover  1,100 jobs
15 June: The UK’s largest car producer has cut 1,100 contract workers at manufacturing plants in Merseyside and the West Midlands.

Travis Perkins  2,500 jobs
15 June: The builders’ merchant, which is behind DIY retailer Wickes and Toolstation, is cutting 2,500 jobs in the UK, accounting for almost a 10th of its 30,000-strong workforce.

Centrica  5,000 jobs
11 June: The owner of British Gas announced in June that it intends to cut 5,000 jobs – a quarter of its UK workforce – in mostly senior roles, and remove three layers of management.

Johnson Matthey  2,500 jobs
11 June: The chemicals company, a major supplier of catalytic converters for cars, plans to make 2,500 redundancies worldwide over the next three years, 17% of its workforce.

Bombardier  600 jobs
11 June: The Canadian plane maker will cut 600 jobs in Northern Ireland, as part of 2,500 redundancies announced in June.

Monsoon Accessorize  545 jobs
11 June: The fashion brands were bought out of administration by their founder, Peter Simon, in June, in a deal which saw 35 stores close permanently and led to the loss of 545 jobs.

BP  2,000 jobs
8 June: The oil company said in June it plans to make 10,000 people redundant worldwide, including an estimated 2,000 in the UK mostly in office roles, by the end of the year.

Mulberry  470 jobs
8 June: The luxury fashion and accessories brand said in June it is to cut 25% of its global workforce and has started a consultation with the 470 staff at risk.

Bentley  1,000 jobs
5 June: The Crewe-based luxury carmaker intends to shrink its workforce of 4,200 by almost a quarter, slashing 1,000 roles through a voluntary redundancy scheme.

Aston Martin Lagonda  500 jobs
4 June: The Warwickshire-based luxury car manufacturer, struggling even before the pandemic, has announced 500 redundancies.

Lookers  1,500 jobs
4 June: The car dealership chain said it plans to cut 1,500 jobs and close 12 dealerships just days after car showrooms were allowed to reopen in England.

Rolls-Royce  9,000 jobs
3 June: The jet-engine manufacturer has confirmed that 3,000 job cuts, of a planned 9,000 worldwide, will be made in sites in the UK.

The Restaurant Group  3,000 jobs
3 June: The owner of dining chains such as Wagamama and Frankie & Benny’s has closed most branches of Chiquito and all 11 of its Food & Fuel pubs, with another 120 restaurants to close permanently. Total job losses could reach 3,000.

EasyJet  4,500 jobs
28 May: The airline has announced plans to cut 4,500 employees, or 30% of its workforce, as it prepared for lower demand.

McLaren  1,200 jobs
26 May: McLaren Group, the Formula One team owner and maker of supercars, cut 1,200 jobs as it scrambled to save cash.

Clarks  900 jobs
21 May: Clarks plans to cut 900 office jobs worldwide as it grapples with the growth of online shoe shopping as well as the pandemic.

Ovo Energy  2,600 jobs
19 May: Britain’s second biggest energy supplier announced in May it planned to cut 2,600 jobs and close offices after the lockdown saw more of its customer service move online.

JCB  900 jobs
15 May: Digger maker JCB said in May up to 950 jobs were at risk after demand for its machines halved due to the coronavirus shutdown.

Tui  8,000 jobs
13 May: Travel company Tui plans to cut up to 8,000 jobs worldwide in response to the coronavirus chaos engulfing the tourism industry.

Virgin Atlantic  3,000 jobs
5 May: Richard Branson’s airline is to cut more than 3,000 jobs, more than a third of its workforce, and will shut its operations at Gatwick.

Ryanair  3,000 jobs
1 May: The Irish airline intends to slash 3,000 roles and reduce staff pay by up to a fifth.

Aer Lingus  900 jobs
1 May: The Irish flag carrier, part of International Airlines Group (IAG), plans to cut 900 jobs.

Oasis and Warehouse  1,800 jobs
30 April: The fashion brands were bought out of administration by restructuring firm Hilco in April, with all of their stores permanently closed and the loss of more than 1,800 jobs.

British Airways  12,000 jobs

28 April: The UK flag carrier plans to make up to 12,000 of its staff redundant, a reduction of one in four jobs at the airline, with cabin crew, pilots and ground staff affected.

Meggitt  1,800 jobs

23 April: British engineering company Meggitt plans to shed about 1,800 jobs making parts for commercial aviation.

Safran  400 jobs

23 April: French aircraft seat maker Safran made 400 job cuts at its UK operations, including a plant in Cwmbran.

Cath Kidston  900 jobs

21 April: More than 900 jobs are to be axed with immediate effect at retro retail label Cath Kidston after the company said it was permanently closing all 60 of its UK stores.

Debenhams  4,000 jobs

9 April: At least 4,000 jobs will be lost at Debenhams in its head office and closed stores, following its collapse into administration in April, for the second time in a year.

Laura Ashley  2,700 jobs
17 March: Laura Ashley collapsed into administration with 2,700 job losses and said rescue talks had been thwarted by the pandemic.

Photograph: Bloomberg

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Under the plan, the government will support eligible businesses by paying two-thirds of each employee’s salary, up to a maximum of £2,100 a month.

This is a higher payout than the furlough scheme is offering currently. It originally offered 80% support but had been gradually reduced to 60%, with a cap of £1,875, from the start of this month.

The new grant that is designed to help cover other fixed costs is up to £3,000 per month for firms in England. Devolved administrations in Wales, Scotland and Northern Ireland will receive a total of £1.3bn in increased funding this year to cover similar measures.

The new scheme is a higher level of taxpayer support than Sunak was offering when he announced his winter economy plan. The original job support scheme covered only staff in “viable” jobs who can work reduced hours and it offered public money to cover 22% of worker’s pay. It would have provided no support to staff working for businesses forced to close their doors.

Rishi Sunak said: “Throughout the crisis the driving force of our economic policy has not changed. I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves.

“The expansion of the job support scheme will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time.”

The Treasury said businesses will only be eligible to claim the grant while they are subject to lockdown restrictions. Employees must be off work for a minimum of seven consecutive days. The new scheme will will be available for six months, with a review in January and will be UK wide.

The Treasury expects the cost of the new scheme to run to hundreds of millions of pounds a month, putting the cost of the entire six-month package at several billion pounds.

Asked whether the measure isn’t just an extension of the furlough, a Treasury official said: “The very clear difference is that this is targeted at firms that are required to close.”

The official insisted Friday’s expansion had always been envisaged, if closures became more widespread.

The general secretary of the TUC, Frances O’Grady, welcomed the scheme but said some industries still needed targeted help this winter: “This scheme will protect jobs in businesses forced to close by local restrictions. But ministers still need to do more to stop the devastation of mass unemployment … Nationally, industries like the arts, hospitality, retail and aviation face a long, tough winter. These sectors need targeted help.”

Adam Marshall, director general of the British Chambers of Commerce welcomed Sunak’s new scheme but also said it did not go far enough. He said the new local restrictions and lockdowns would hit many other firms, especially in supply chains and in town and city centres. “Their cash-flow concerns and worries about future demand, must be heeded,” he added.

With weeks left until furlough ends, economists have warned that unemployment could more than double to 4m by the end of the year – with youth unemployment hitting 17%, the highest level since the 1980s.

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The announcement of fresh support also comes as official figures showed Britain’s economic recovery from the Covid recession was already slowing before the launch of new restrictions this autumn.

Gross domestic product (GDP) rose by just 2.1% in August from the level in July, falling short of forecasts for a growth rate of 4.4%, despite a boom in consumer spending at hotels, pubs and restaurants fuelled by the government’s Eat-out-to-help-out scheme.

Analysts expect the UK economy to struggle for growth in the months ahead amid the second wave of coronavirus infections and as the government orders fresh restrictions on business and social life.

This post has originally been featured in Guardian.