UK business leaders have expressed “relief” after the government committed to pay the wages of employees unable to work due to the coronavirus pandemic.
The Confederation of British Industry hailed the “landmark” pledge but unions raised concerns self-employed and freelancer workers had no protection.
Prime Minister Boris Johnson also ordered pubs and restaurants to close.
Chancellor Rishi Sunak, who announced the support package at the daily coronavirus briefing with the PM, said closing pubs and restaurants would have a “significant impact” on businesses.
But he added the government intervention – covering wages of up to £2,500 a month – would mean workers should be able to keep their jobs, even if their employer could not afford to pay them.
It is understood the wage subsidy will apply to firms where bosses have already had to lay off workers due to the pandemic, as long as they are brought back into the workforce and instead granted a leave of absence.
Paul Johnson, director of the Institute for Fiscal Studies, said it was not yet clear how many people would take advantage of the government’s offer, but he estimated that for every 1% of private sector workers who do, it will cost about £1bn.
“So if, for example, 10% of private sector workers do, it’s £10bn over three months and if it’s 20% then it’s £20bn, or thereabouts,” Mr Johnson told BBC 4’s Today programme.
The government had been under growing pressure to intervene to support workers to prevent mass unemployment as a result of measures directed against the outbreak.
The Confederation of British Industry, the UK’s biggest business group, said it was a “landmark” offering from the government.
“It marks the start of the UK’s economic fightback – an unparalleled joint effort by enterprise and government to help our country emerge from this crisis with the minimum possible damage,” director general Carolyn Fairbairn told BBC Newsnight.
Nik Antona, national chairman of the Campaign for Real Ale (Camra), said many pubs had been “hung in limbo” and welcomed the “clear instruction that closing their doors is the right thing to do” and gave owners confidence that the government would support their staff and their business.
Tim Foster, co-founder of The Yummy Pub Co, which runs four pubs in and around London, said the new measures were overdue but would stop his 89 members of staff being laid off.
But some business groups warned of the potential risk to firms if they had to wait for the money to arrive.
Kate Nicholls, the chief executive of trade body UK Hospitality, said many businesses faced rent payments before the support was due and urged banks and landlords to help “bridge the gap towards this generous government support”.
The Federation of Small Businesses warned the delay in wages help – potentially until the end of April – meant many small firms would still face “an immediate, potentially terminal cash flow crunch”.
The wage package is the latest in a series of government moves aimed at easing the burden on businesses and their employees.
However, there was not the same wages guarantee for the five million self-employed people in the UK. Instead, Mr Sunak increased benefits that many will have to fall back on.
Frances O’Grady, general secretary of the Trade Union Congress, told the BBC Today programme that the lack of measures put in place for the self-employed “will cause real hardship unless we get to grips with it”.
The cinema workers’ union Bectu said the measures were a “devastating blow” to its freelance and self-employed members and that workers needed “much more” support than was promised.
This move is an incredible intervention for any British government, let alone a Conservative one, but proportionate to the size of the terrible, but temporary, economic impact that could follow the coronavirus shutdowns.
In theory, it should save hundreds of thousands of jobs. Perhaps more. Employers have to accept that the government is doing something they would have never imagined a UK government to do.
At 80% cent of wages up to £2,500 a month, it is a scheme more generous than some of the high welfare Scandinavian countries. It instantly transforms the social safety net of this nation.
The new measures came as Mr Johnson said the closures of cafes, pubs and restaurants would be enforced “strictly” and that the situation would be reviewed each month.
He also announced that all the UK’s nightclubs, theatres, cinemas, gyms and leisure centres had been told to close “as soon as they reasonably can”.
“The more effectively we follow the advice we are given, the faster this country will stage both a medical and an economic recovery in full,” the prime minister said.
It follows similar measures taken in other countries – including in Ireland, where pubs and bars were asked to close from last Sunday.
Meanwhile, the number of deaths in the UK rose to 177 on Friday – with 167 in England, six in Scotland, three in Wales and one in Northern Ireland.