// Rishi Sunak cancels Budget & promises financial package to replace the furlough scheme
// The Chancellor expected to outline his plans to extend & replace financial support in Parliament today
// The furlough scheme is in the process of being tapered off ahead of an October deadline to shut it down
Chancellor Rishi Sunak has cancelled this year’s Budget and will instead prioritise protecting millions of jobs in sectors hit by the latest government guidance on Covid-19.
The Treasury said Sunak would outline his plans to extend and replace financial support during an appearance in Parliament today, as the UK enters a second wave of soaring new cases during the coronavirus pandemic.
His move comes after increasing pressure from business groups, MPs and unions to extend the furlough scheme as stricter restrictions are introduced for the second wave.
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Number 11 said work on the scheme, first revealed by the Chancellor on Twitter, had been taking place in parallel with Budget preparations and the focus has been on jobs to avoid the expected three million unemployed.
The Treasury said: “We will always be honest with people about the difficult trade-offs that are involved here.
“Not between health and the economy, but between keeping people in jobs and helping them find new ones.
“And between help in the here and now and rebuilding in the future. That’s what people deserve.”
The Chancellor initially announced his move via Twitter, with a graphic titled “Winter Economy Plan”.
No further details were provided and it came as the UK Government confirmed 6178 new coronavirus cases by 9am yesterday – the highest daily number since May 1.
The news follows comments by Prime Minister Boris Johnson about a “creative and imaginative” action plan to protect jobs, with unions and business leaders pointing to schemes used in other European countries.
Bank of England governor Andrew Bailey said on Tuesday it was time to “stop and rethink” the furlough scheme in favour of a targeted approach.
The Trades Union Congress (TUC), which outlined its furlough replacement proposal last month, said the government must “fast-track a new plan” to protect jobs.
The mooted plans would reportedly see the government and firms share the cost of topping up wages for employees only able to work part-time due to the pandemic.
Ministers are desperate to avoid another nationwide lockdown, due to the associated economic damage and early indicators suggesting the recovery has slowed.
One option reportedly being considered to replace the furlough scheme is Germany’s Kurzarbeit, or shorter work-time policy, under which firms can cut working hours in economic downturns with the state replacing part of their lost income.
Another proposal put forward by the CBI would see subsidies for firms that can offer staff at last 50 per cent of their normal hours, with the cost for non-working hours shared equally by the company, the Treasury and the employee.
The furlough scheme has cost the government £39.3 billion to date, with £3.9 billion between August 16 and September 20 alone, according to the latest figures.
It is currently in the process of being tapered off ahead of an October deadline to shut down completely.
with PA Wires