Autumn 2020 Budget cancelled as Rishi Sunak set to outline measures 'to protect jobs' this winter

Rishi Sunak will update MPs tomorrow
REUTERS

The 2020 budget has been cancelled to allow the Chancellor Rishi Sunak to focus on his winter economic plans to replace the furlough scheme, it is understood.

A source close to the Treasury said: “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.”

No specific date had been set but it was expected to take place in November.

The Treasury said in a statement: "As we heard this week, now is not the right time to outline long-term plans - people want to see us focused on the here and now.

"So we are confirming today that there will be no Budget this autumn."

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It comes after Mr Sunak announced he would update MPs on plans “to continue protecting jobs” on Thursday after Boris Johnson announced new coronavirus restrictions which could last for up to six months.

The Chancellor said: “As our response to coronavirus adapts, tomorrow afternoon I will update the House of Commons on our plans to continue protecting jobs through the winter.”

Mr Sunak is said to be weighing up a new scheme as part of a wider emergency support programme as pressure mounts on the Government to help businesses survive a second wave of coronavirus.

The mooted plans would reportedly see the Government and firms share the cost of topping up wages for employees only able to work part-time due to the pandemic.

Calls have ramped up for a new lifeline for firms after Boris Johnson announced six months of tougher restrictions that threaten the economic recovery, as fears also grow of mass unemployment once the furlough scheme ends on October 31.

Bank of England governor Andrew Bailey said on Tuesday it was time to “stop and rethink” the furlough scheme in favour of a targeted approach.

The Trades Union Congress (TUC), which outlined its furlough replacement proposal last month, said the Government must “fast-track a new plan” to protect jobs.

TUC general secretary Frances O’Grady said: “We have published detailed proposals for a new short-time working and upskilling scheme.

“With the right approach we can stop mass unemployment scarring millions.

“My message to ministers is clear: let’s get around the table and fast-track a new plan.”

Mr Sunak has pledged to be “creative” and is understood to be weighing up a number of possible measures to subsidise workers’ wages, having consulted unions and business groups.

It is thought he postponed an announcement due on Wednesday to extend emergency loan schemes in favour of a bigger support package.

One option reportedly being considered is a scheme similar to Germany’s highly-praised Kurzarbeit, or shorter work-time policy, under which firms can radically cut working hours in economic downturns with the state replacing part of their lost income.

Boris Johnson and Rishi Sunak leave Downing Street and head for a Cabinet meeting (file photo)
Jeremy Selwyn

The TUC has proposed a similar scheme that would see workers receive 80% of their salary for the hours they are not in work.

Companies would get a 70 per cent subsidy from the Government, provided they bring back every worker on the scheme for a minimum proportion of their normal working hours.

Another proposal put forward by the CBI business group would see subsidies for firms that can offer staff at last 50 per cent of their normal hours, with the cost for non-working hours shared equally by the company, the Treasury and the employee.

The Treasury declined to comment, while Number 10 also refused to be drawn on Mr Sunak’s plans.

The Prime Minister’s official spokesman told reporters: “We have always said that we keep our support under review and that it will be adapted as the circumstances evolve.”

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

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

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