4,000,000 have been furloughed as a result of coronavirus
The scheme launched on schedule last week and the first grants have just been paid.
Around half a million employers have applied to the Coronavirus Job Retention scheme as lockdown continues to prevent businesses from operating.
Chancellor Rishi Sunak told the House of Commons that the colossal rescue package, which allows bosses to put staff on leave and claim 80% of their wages through the government, launched on schedule last week and the first grants have just been paid.
He said one in four businesses had stopped trading as a result of the pandemic, leading to more than four million jobs being furloughed.
He said the government is doing what it can but ‘can’t save every job and every business’, warning: ‘These are already tough times and there will be more to come.’
Thinktank Resolution Foundation has predicted the furlough scheme could cost the government £30 to £40 billion in three months, while independent finance watchdog the Office of Budget Responsibility (OBR) has warned the UK economy could shrink by a third if lockdown continues for some time.
But the finance minister said the grim forecoasts would be even worse were it not for the government’s job retention scheme, which has been at the centre of efforts to ensure that the UK can bounce back ‘as quickly as possible’ when lockdown is over.
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‘I wholeheartedly believe that the best way out of this is to ensure that as many people as possible can return to the job that they had. That is the best way to protect people, to protect their livelihoods, their families, their household incomes’ he said.
However, he acknowledged some firms had struggled during the wait for the scheme to go live, and announced a new tax-payer backed micro-loan to help smaller businesses.
The ‘bounce back’ scheme will allow small firms to apply for 25% of their turnover up to a maximum of £50,000, with the government paying the interest for the first 12 months.
Mr Sunak said this would start next week and successful applicants could receive money within 24 hours.
The Chancellor acknowledged that some small firms were struggling to access credit, and by guaranteeing the full value of the loan he hopes that lenders will allow companies to borrow the funds they need.
He said there would be ‘no forward-looking test of business viability, no complex eligibility criteria, just a simple, quick standard form for businesses to fill in’.
But he rejected calls for the government to underwrite other coronavirus loan schemes with a 100% guarantee, insisting his new plan would ‘carefully target’ the level of state support at those who need it most.
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