Budget cancelled: Sunak’s overnight rescue plan

23 September 2020, 22:00 | Updated: 23 September 2020, 22:04

Pressure is growing on Rishi Sunak to announce an alternative to furlough to save thousands of jobs
Pressure is growing on Rishi Sunak to announce an alternative to furlough to save thousands of jobs. Picture: PA Images
Ewan Quayle

By Ewan Quayle

Pressure is growing on Rishi Sunak to announce a radical support package to save thousands of jobs as the UK heads into new coronavirus restrictions.

It was announced on Wednesday that a second 2020 Budget this autumn has been scrapped after reports it would have spelt out a long-term plan for after the pandemic - something increasingly unlikely as the UK battles a second wave.

The Treasury later confirmed, however, that the Chancellor will make a statement to Parliament on Thursday as speculation mounts that he will announce a replacement for the furlough scheme, following weeks of continued pressure from opposition parties and business leaders.

Reports suggest Mr Sunak could announce a new wage subsidy scheme to support employers and employees through a difficult winter.

Read more: Is the furlough scheme going to be extended by Chancellor Rishi Sunak?

The Government has repeatedly said that furlough will end on 31 October, but many are now expecting a radical alternative as ministers seek "creative" alternatives to avoid a full-blown jobs crisis.

The Chancellor is said to be looking at a 'short working hours' scheme, proposed by the Confederation of British Industry (CBI), where workers would remain part-time and have some of their wage subsidised by the Government.

It is also predicted that he could extend support to businesses in the form of loans and grants, following on from the Coronavirus Business Interruption Loan Scheme.

There was a stark warning from opposition leader Sir Keir Starmer in a televised address on Wednesday evening, where he called for a ‘Plan B’ for the economy.

"It makes no sense to bring in new restrictions at the same time as phasing out support for jobs and businesses," he told the public.

"There was nothing in the Prime Minister’s statement last night to protect people’s jobs, businesses or our town centres and high streets, and no clarity about what happens when the furlough scheme ends.

Read more: Sir Keir Starmer says Government needs a 'Plan B' to save Britain's economy

"That’s a huge gap, it’s a huge mistake, and it could lead to a wave of job losses this winter - we need a national effort to protect jobs and prevent a second lockdown."

The address follows the new restrictions announced in a similar broadcast by Prime Minister Boris Johnson on Tuesday, which laid out a 10pm curfew on pubs, bars and restaurants and asked people to once again work at home if they could from Thursday.

Business leaders have been quick to warn of large-scale job losses - worse than the hundreds of thousands already predicted - if tighter restrictions were introduced.

Some 900,000 jobs are on the line in the hospitality sector alone, industry chiefs said, while the travel sector is also sounding alarm bells. 

Earlier this week, pub chain Greene King, which owns a stable of 2,700 pubs, restaurants and hotels joined calls to extend the furlough scheme, but critics say it is costing the taxpayer too much.

The scheme has cost the Government £39.3 billion to date, with £3.9 billion between 16 August and 20 September alone, according to the latest figures.

More than £13 billion has also been handed to firms and workers through five different Government support schemes in the last month.

Read more: Businesses warn of wipeout if national lockdown returns

Responding to concerns, a source close to the Treasury told reporters: "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."