More than 140,000 companies employing more than one million people applied for emergency Government aid to pay workers wages in just eight hours today, Rishi Sunak revealed tonight .
He said the coronavirus job retention scheme, which opened to firms in a bid to ward off widespread unemployment, should pay out to companies who logged in today within six working days.
He spoke at tonight’s daily news conference after the scheme’s website received 67,000 claims in the first 30 minutes this morning.
The Chancellor said that the programme was a sign that the Government had ‘delivered our promise’ to get help in place before the end of April.
But it comes amid confusion over when and how the economy will be restarted once the worst of the outbreak is over.
Addressing the nation, Mr Sunak said: ‘Today HMRC opened the Coronavrus job retention scheme at 8am; as of 4pm this afternoon over 140,000 firms have applied.
‘And the grants they receive will help pay the wages of more than a million people. A million people who if they had not been furloughed would have been at risk of losing their job.
Mr Sunak said the coronavirus job retention scheme should pay out to companies who logged in today within six working days
Jim Harra, chief executive of HM Revenue & Customs (HMRC), said his organisation is ‘very confident’ the system running the coronavirus job retention scheme would work after it had been ‘tested at volume’
‘Firms applying today should receive their cash in six working days, HMRC will continue to provide updates on he number of people furloughed.’
Mr Sunak said the goal of the new schemes was to maintain ‘our economy’s productive capacity so that we can bridge through this crisis’.
‘That is what we have done,’ he told the press conference.
Employers are expected to claim for millions of workers put on temporary leave because of the crisis, and the furlough system has been given a capacity of up to 450,000 employee claims per hour.
Under HMRC’s job retention scheme, the government will cover 80 per cent of a worker’s wages, up to £2,500 a month, if they are not working but are kept on the payroll.
Chancellor Rishi Sunak has also announced a £1.25 billion package to aid companies in the innovation sector.
The lockdown is pressuring a number of British businesses, with one report warning that as many as 11.7million people could be furloughed or left jobless in the three months to the end of June.
But Jim Harra, chief executive of HM Revenue & Customs, said his organisation is ‘very confident’ the system running the coronavirus job retention scheme would work after it had been ‘tested at volume’.
He revealed the Coronavirus Job Retention scheme system had been tested at ‘up to 450,000 claims per hour’, and insisted that if employers are patient while using the Government website in the next few days, they will be paid by April 30.
Speaking to BBC Breakfast, he said: ‘Of course, there is a limit to the capacity of the system, so if every employer tries to use it at 8 o’clock this morning some will be asked to queue or come back later, that doesn’t mean the system has crashed, it simply means that it’s full.
The scheme for workers who have been furloughed – given a temporary leave of absence – opened today and Chancellor Rishi Sunak announced a £1.25 billion package to aid companies in the innovation sector
‘But employers can claim any time over the few days, between now and Wednesday, and we will have the money in their bank account by April 30.’
He added: ‘I’m confident that if employers are patient, use the system, it’s available 24/7, and as I say, if your payroll date is April 30 you can claim any time today, tomorrow or Wednesday and we will get that money into your account.’
Up to half of Britain’s companies are expecting to furlough most of their staff at a cost of up to £40billion to the Treasury.
The Government initially thought around 10% of companies would take up the job retention scheme, at a cost of around £10billion, but around a fifth of smaller firms plan to furlough all of their staff and 50% are taking up the scheme for some of their employees, the BBC reports.
It comes as a report by an independent think tank suggested as many as 11.7 million people could be furloughed or unemployed over the next three months.
Employees in the lowest-paying hospitality and retail sectors are most likely, 50% more than average, to be affected, a paper by the Resolution Foundation has found.
Analysing the differing impact of the Covid-19 crisis within the labour market, the report states: ‘As many as 3.1 million employees (46%) in these sectors could be furloughed, with an additional 800,000 workers in this part of the economy becoming unemployed.
‘In contrast, only 4% of those working in the highest-paid sector, finance and insurance, are likely to be furloughed.’
It comes as the Government’s Coronavirus Job Retention Scheme (JRS) launched on Monday.
The report entitled Launching An Economic Lifeboat: The Impact Of The Job Retention Scheme warned of the possible extent of joblessness, but pointed to the mitigation impact of the scheme.
It said: ‘Although we estimate that non-working could increase by as much as 11.7 million in Q2 2020, this is heavily tilted towards use of the JRS (8.3 million employees).
‘Unemployment could still rise sharply to 3.4 million (10%) in Q2 2020, but because of the JRS it will not reach catastrophic levels.’
Google trends showing the popularity of search terms ‘furlough’ (in blue), ‘universal credit’ (yellow) and ‘coronavirus symptoms’ (red) over the past 90 days
It added that the Job Retention Scheme ‘may well have the largest fiscal cost of any intervention’ adding the Government needs to provide ‘regular updates on scheme take-up’ and there was a ‘strong case for extending the scheme to cover shorter hours working’.
Daniel Tomlinson, economist at the Resolution Foundation said: ‘The Government’s welcome Job Retention Scheme is what stands between Britain experiencing high unemployment over the coming months, and catastrophic depression-era levels of long-term joblessness.
‘It is proving particularly essential in big, low-paying sectors like hospitality and retail, where around half the workforce are no longer working.
‘The priority from today is for the Government to process claims as quickly as possible so that the millions of firms relying on it get the financial support they need.
‘Given the scheme’s central role in both providing a safety net and restarting economic activity, the Government should provide regular updates on take-up and payments, and extend it to allow shorter-hours working.’
Furlough scheme could cost THREE TIMES what was planned after half of UK businesses furlough nearly ALL their staff running up £40billion in just three months
The Government’s coronavirus furlough scheme website launches today as around half of Britain’s companies are expecting to furlough most of their staff at a cost of up to £40billion to the Treasury.
The Government initially thought around 10% of companies would take up the job retention scheme, at a cost of around £10billion, but around a fifth of smaller firms plan to furlough all of their staff and 50% are taking up the scheme for some of their employees, the BBC reports.
With businesses struggling in the wake of the coronavirus pandemic and subsequent lockdown, the Government introduced a grant to pay 80% of staff wages.
The Resolution Foundation believes between 8million and 11million staff could furloughed, which would cost the government between £30bn and £40bn, the BBC reports. That represents a figure that is three or four times the original estimate.
Speaking last month Rishi Sunak said: ‘Our Coronavirus Job Retention Scheme supports workers and businesses up and down the UK’
Up to 11million people are predicted to be placed on the furlough staff, which could cost the government up to £40million, according to the BBC. Stock picture
Construction firm Mace Group has put 800 staff on furlough.
Chief executive Mark Reynolds told the BBC: ‘What the furlough scheme’s enabled us to do is keep the capacity and capability within our business so that when we come through this, we can then re-deploy our people immediately so we can go back to work.’
A report by The Corporate Finance Network of accountants working with nearly 13,000 businesses predicts that 18% of all struggling small companies will not be able to survive the next month due to the UK lockdown.
This could see nearly four million staff lose their jobs in May, it warned, adding that as many as 42% of small firms could go bust if the lockdown lasts for four months or more.
Many lenders are also refusing to give them the business-saving money if they have cash in the bank – or if they do demanding owners put up £100,000 in collateral, usually their homes, if they need to borrow more than £250,000. Some business owners say they have also been rejected if they ask for less than £25,000.
Scott Littlefield, from SPL Management, a property company based in Poole, told MailOnline: This scheme is not really fit for purpose.
‘Our bank, Nat West, is virtually non-contactable at the best of times and the staff in branch can only deal with personal banking issues, not business.
Tottenham Hotspur chairman Daniel Levy with Mace CEO Mark Reynolds in 2017, both bosses have placed staff on the government’s furlough scheme
‘They always say to approach your relationship manager although all relationship managers were done away with in 2010
‘Very few people will be able to access this money. Those that do will be bust within short time at the sort of interest rates being mooted.’
Chancellor of the Exchequer Rishi Sunak said: ‘Since the start of the coronavirus outbreak, I’ve made it clear that hard-working employers and employees should not have to suffer hardship unnecessarily.
‘Our Coronavirus Job Retention Scheme supports workers and businesses up and down the UK.’