UK government to pay 80% of wages and defer VAT

UK Chancellor of the Exchequer Rishi Sunak (pictured) announced 20 March that the UK government is to pay up to 80% of the wages of individual UK workers to keep them in jobs as the Covid-19 pandemic tightens its grip on the UK economy. Chancellor Sunak said the state would pay grants covering up to 80% of the salary of workers kept on by companies, equating up to a total of £2,500 (US$2,912) per month. There little immediate respite for freelancers, however. Chancellor Sunak went to say the government would be deferring the next quarter of Value Added Tax (VAT) payments, the equivalent of a £30bn injection into the economy. The UK events industry has essentially shut down – and pubs, clubs, social centres and restaurants ordered to close on 20 March. The new package comes on top of the UK Chancellor’s business loan interruption scheme and more detail is expected on 23 March. Lex Butler, Chair of the UK’s Hotel Booking Agents Association (HBAA) which represents many agencies and venues, welcomed what she called a “life belt” from government. She said: “With his financial support initiatives today (Friday), the Chancellor has thrown welcome life belts to every business in the hospitality and events industry to keep them afloat. But with so many on the verge of sinking, especially now that bars and restaurants are all ordered to close, it is vital that these funds reach the businesses urgently. It may be too late for some.” Jane Longhurst, Chief Executive of the UK Meetings Industry Association, also welcomed the “comprehensive package” as a result of the industry’s ongoing collective request for financial support for the business meetings and events sector. “We continue to seek recognition for the struggles this sector is facing so, it was reassuring that this announcement covers all businesses,” said Longhurst, adding: “It is good news that the financial measures will include our sector for the next three months and safeguard the continued employment of our talented workforce.” Jane Pendlebury, CEO of the Hospitality Professionals Association (HOSPA) also welcomed the news, while accepting that a lockdown on hospitality businesses is effectively in place. She said: “As feared, more lockdown restrictions are now in place. However, as an industry we appreciate both the urgency and the need behind these measures. “A huge relief though is the Government’s promise to pay 80% of wages. One of the biggest fears amongst hospitality operators is how they can pay their non-working staff. These fears are now greatly allayed.” However, the UK Association of Independent Professionals and the Self-Employed (IPSE), has warned that the government’s Covid-19 response measures leave the self-employed “trailing far behind employees”. Andy Chamberlain, director of Policy at IPSE said: “Despite unprecedented measures to support employees, the government has still left the self-employed trailing far behind.”