Rishi Sunak is unveiling an emergency COVID rescue plan to protect jobs that is expected to include wage subsidies, VAT cuts and more cheap loans for struggling businesses.
In a dramatic move, the chancellor has cancelled his autumn Budget and instead will launch a “Winter Economy Plan” after MPs and unions warned of the risk of a “tsunami” of job losses.
The aim is to help the economy cope with the new coronavirus restrictions announced by Boris Johnson this week, including a 10pm curfew for pubs and restaurants and ordering office staff to work from home.
And as the government prepared to launch its NHS COVID-19 App, the latest figures showed 6,178 new cases of coronavirus in the UK, taking the overall number to 409,729.
The centrepiece of the multi-billion-pound package is expected to be a scheme, modelled on one in Germany, in which taxpayers subsidise the wages of workers returning to work part time after being furloughed.
Other moves are likely to be extending a VAT cut to 5% for the lockdown-ravaged hospitality and tourism industries, which was introduced earlier this year, from next January until the end of March.
And four loan schemes for hard-hit businesses are likely to be extended until the end of November, with the terms increased from six to 10 years to reduce monthly repayments.
The chancellor has taken the highly unusual step of cancelling his November Budget because “now is not the right time to outline long-term plans and people want to see us focused on the here and now”, it was revealed.
A Treasury source told Sky News: “No-one wanted to be in this situation but we need to respond to it. The chancellor has shown he has been creative in the past and we hope that people will trust us to continue in that vein.
“Giving people reassurance and businesses the help they need to get through this is uppermost in his mind.”
According to the Treasury, the chancellor is promising a “flexible and adaptable approach to economic support, because people have needed the help and they’ve needed it quickly and at the right time”.
Allies said he would be “very honest with people” about the “difficult trade-offs” the government faces as it tries to deal with the twin challenges of rising infection rates and an economic slump.
“It is not about health versus the economy, but about the balance between keeping people in jobs and finding them new ones,” a source said.
And the source added: “What remains true is that our priority is one word: jobs.”
Previewing the Chancellor’s statement, the prime minister told MPs: “What we will do is continue to put our arms around the people of this country going through a very tough time and come up with the appropriate creative and imaginative schemes to keep them in work and keep the economy moving.”
That prompted the Labour MP Grahame Morris to demand a targeted expansion of a COVID job retention scheme and to tell Mr Johnson: “Make no mistake: a tsunami of job losses is in the pipeline within 38 days.”
Later, in a TV address responding to the PM’s broadcast 24 hours earlier, the Labour leader Sir Keir Starmer urged the government to come up with a “plan B” for the economy ahead of the furlough scheme for workers ending in October.
“It makes no sense to bring in new restrictions at the same time as phasing out support for jobs and businesses,” he said, as he warned of a “wave of job losses this winter”.
The shop workers’ union also warned of “a tsunami of job losses” and called for an online sales tax to save the high street.
“If we are going to save the high street, there needs to be radical and bold action to level the playing field between online retail and ‘bricks and mortar’ shops,” said general secretary Paddy Lillis. “The time is long overdue for the government to look seriously at introducing some form of online sales tax.
“As a society we have a choice, do we want to see the high street go to the wall or do we want to save it. Retail is the cornerstone of our towns, cities and communities. It employs around three million people and needs urgent assistance to get the industry back on its feet.”