UK should fund 22 billion pounds package to help workers hit by virus: Think tank

Friday, 20 March 2020 00:00 - - {{hitsCtrl.values.hits}}

A woman wearing a protective face mask and gloves in Westminster as the spread of the coronavirus disease (COVID-19) continues, in London, Britain – REUTERS

LONDON (Reuters): Britain’s government should spend 22 billion pounds ($ 26 billion) over the coming year to help workers who face unemployment due to the coronavirus, a think tank said on Thursday.

The sum – roughly equivalent to the extra help finance minister Rishi Sunak promised to businesses on Tuesday – would allow some firms to temporarily hold on to staff, and cushion the blow for those who did lose their jobs, the Resolution Foundation said.

The government should fund businesses to put staff who they did not need on paid leave with two-third of their normal salary for six months, rather than making them redundant. This would cost 8 billion pounds if it helped a million workers.

“This will ensure they can pick things up quickly when conditions improve,” Resolution Foundation chief executive Torsten Bell said.

A cheaper option would be to pay unneeded workers 151 pounds a week – similar to the level of pay for women who take maternity leave – which would cost 3 billion pounds.

Increasing the main unemployment benefits, which are no higher in real terms than in the early 1990s, to 100 pounds a week from 74 pounds a week, would cost 10 billion pounds. Increasing other means-tested benefits by 10% would cost a further 3 billion, taking the total cost to 22 billion pounds.

“This approach would show the government is committed to doing whatever it takes to support family budgets and cushion the living standards hit from the wider economic shock,” Bell said.