Daily Covid-19 Brief: Friday, May 1

Each day, our Public Policy team will be reporting on the latest news in the evolving situation. To view the previous day’s summary, please click here.

Treasury in discussion with business groups on whether companies would be able to claim furlough on part-time workers

• The discussions came  after Chancellor, Rishi Sunak told MPs on Monday that he was planning a “gradual” winding down of the government’s job support scheme after it is due to end on 30 June.
• Proposals include slowly reducing the support level or removing it from sectors one after another.
• The aim of the discussions with business groups is to allow at least some employees to return to work part-time initially as businesses gradually reopen.
• Countries such as France and Germany have allowed furloughed staff to work part-time as businesses reopen.
• Under the proposals being discussed businesses should be able to bring full-time staff back to work for a few days a week — whilst still using the furlough system for days when staff are not required.
• However Treasury officials are cautious about the potential for fraud if companies are allowed to make claims for staff working a fraction of their usual hours.
• However a potential solution under consideration by the Treasury is to cut the time that an employee must be furloughed to qualify for the job retention scheme from three weeks to one. This would allow factories to employ workers on a one-week-on, one-week-off basis.

Transport secretary, Grant Shapps has announced plans to ensure that flights between mainland Britain and Northern Ireland continue to operate

• £5.7 million has been allocated to ensure that flights between mainland Britain and Northern Ireland continue to operate.
• The package is being funded by the UK government and the Northern Ireland executive to ensure airports and airlines do not axe “lifeline services” because of the collapse in demand caused by the pandemic.
• Aer Lingus and Loganair will be subsidised to maintain London flights to and from Belfast city airport and City of Derry airport respectively.
• The Northern Irish airports involved will also be given funding to provide ground services for the flights.

Treasury has announced the temporary change to lifetime Isas (Lisas) to allow savers to access funds early without a withdrawal penalty

• Savers who want to access their government-boosted funds early because of the Covid-19 pandemic will no longer face extra withdrawal charges
• The Treasury will legislate for a temporary reduction in the Lisa withdrawal charge to 20% between 6 March 2020 and 5 April 2021.
• This will generally mean account holders will only have to pay back any government bonus they have received, and they will not have to pay the additional withdrawal charge of 5%.

 Other UK COVID 19 news 

• A Downing street spokesperson has said that the government stands ready to help those affected by job cuts at Ryanair and other airlines and could discuss “bespoke support” for aviation firms “as a last resort”.
• The UK conducted 122,347 tests across the country in the 24 hours up to 09:00 BST on 1 May meaning that the government exceeded its target of 100,000 tests a day by the end of April.
• The House of Lords have announced plans to form a Covid-19 committee to scrutinise the government’s response to the pandemic. The committee will scrutinise the government’s response, developing understanding of the lessons learned and how they can be applied in the future.
• The government has announced that the Rugby Football League will receive a £16m cash injection “to safeguard the immediate future of clubs in England”.
• Figures from the Bank of England show that 56,161 mortgages were approved for house purchase in March. This was a drop-off of nearly a quarter (24%) compared with the previous month, and the lowest monthly total since 54,341 approvals were recorded in March 2013.
• The Financial Conduct Authority (FCA) indicated that it would extend the deadline for the implementation of strong customer authentication (SCA) for e-commerce, due to the Covid-19 pandemic. The new deadline will be 14 September 2021.
• The Treasury Committee and its chair Mel Stride MP has reiterated its call for UK Finance to provide daily updates on coronavirus business loans. Stride had previously made this request on 20 April but UK Finance declined.
• Scottish First Minister, Nicola Sturgeon has said Scotland will undertake “advanced outbreak investigation” at care homes that have reported cases of Covid-19. It will involve testing of all residents and staff whether they show symptoms or not.
• All social care workers in Wales will get a cash bonus of £500 each, First Minister Mark Drakeford has announced. The payments will be made to more than 64,000 workers, at a cost of £32.2m.
• The government has announced that Business Improvement Districts in England will receive funding to help cover their day to day costs for the next 3 months.

Relevant world COVID 19 news

• Germany is to reopen museums, galleries, zoos and playgrounds, and allow religious services to resume, in measures agreed by the chancellor, Angela Merkel, and the leaders of 16 federal states. This will take place under strict conditions.
• The Russian prime minister, Mikhail Mishustin, has said he has been diagnosed with Covid-19 and will self-isolate from the government, in the country’s highest-profile case of the disease yet.
• The UN has warned that millions of children risk missing “life-saving” vaccines after a “massive backlog” of shipments built up due to the pandemic. The outbreak has had a huge impact on the air industry, drastically reducing commercial and charter flights meaning dozens of countries are at risk of running out of vital vaccines. The UN wants governments and the private sector to free up freight space.

Company updates

• The Chief Executive of Heathrow Airport warned that Virgin Atlantic may collapse without state support, and suggested the government doesn’t understand the importance of aviation for the economy.
• Budget airline Ryanair will cut 3,000 jobs due to grounded flights and warned some of the airline’s  regional bases outside of major hubs could close.
• Make UK, the body that represents manufacturers, has called for government support for the UK’s struggling industrial sector. The trade body said that the government may need to look beyond the provision of subsidised loans, and consider taking a stake in companies.
• Sainsbury’s Chief Executive Mike Coupe has warned that long queues could continue for months, and warned the supermarket expects profits to fall by £500m.
• RBS announced pre-tax profits fell by 49% after the bank had to set aside £802m for loan losses.
• The number of passengers travelling through Heathrow last month was down by around 97% compared with April 2019. The airport insisted its financial position is “robust”, with £3.2 billion in liquidity, which is “sufficient to maintain the business at least over the next 12 months, even with no passengers”.
• Boots is offering “safe spaces” in its pharmacies for victims of domestic abuse seeking help during lockdown.
• France’s state-owned SNCF railways company estimates it will lose at least €3bn (£2.6bn) in revenue as a result of the Covid-19 outbreak.
• McDonald’s is to reopen a number of UK restaurants for delivery from 13 May after closing all of its sites due to the Covid-19 lockdown. The locations of the 15 restaurants will be announced next week.
• British Airways’ parent company, IAG has signed agreements for €1bn (£900m) of loans backed by the Spanish government, but the money cannot be used to help its UK airline, which is cutting up to 12,000 jobs
• Budget airline Wizz Air will resume some flights from Luton airport on Friday with passengers and crew required to wear face masks.