New measures were unveiled today by Chancellor Rishi Sunak to protect jobs and support businesses over the next few months amidst the ongoing pandemic.
The Chancellor of the Exchequer Rishi Sunak said:
Support for workers
A new Job Support Scheme will be introduced from 1 November to protect viable jobs in businesses that are facing lower demand over the winter months due to coronavirus.
Under the scheme, which will run for six months and help keep employees attached to the workforce, the government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand.
Employers will continue to pay the wages of staff for the hours they work – but for the hours not worked, the government and the employer will each pay one-third of their equivalent salary.
This means employees who can only go back to work for a shorter time will still be paid two-thirds of the hours for those hours they can’t work.
In order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on the employee’s usual salary, capped at £697.92 per month.
Tax cuts and deferrals
As part of the package, the government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year. This will give businesses in the sector – which has been severely impacted by the pandemic – the confidence to maintain staff as they adapt to a new trading environment.
In addition, up to half a million businesses that deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end of March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
On top of this, around 11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
Giving businesses flexibility to pay back loans
The burden will be lifted on more than a million businesses who took out a Bounce Back Loan through a new Pay as You Grow flexible repayment system. This will provide flexibility for firms repaying a Bounce Back Loan.
This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses. These measures will further protect jobs by helping businesses recover from the pandemic.
The government also intends to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.
In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes that are helping over a million businesses until the end of November. As a result, more businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund. This change aligns all the end dates of these schemes, ensuring that there is further support in place for those firms who need it.
Investment in public services
At the start of the pandemic, the Chancellor pledged to give the NHS and public services the support needed to respond to coronavirus – and as of today, £68.7 billion of additional funding has been approved by the Treasury, including £24.3 billion since the Summer Economic Update in July.
This funding has helped ensure the procurement of personal protective equipment (PPE) for frontline staff, provided free school meals for children while at home and protected the country’s most vulnerable. In addition, the £12 billion funding to roll-out the Test and Trace programme has played a key role in helping to unlock the economy, enabling businesses like restaurants and bars to serve customers again.
As announced earlier this year, the Treasury has also guaranteed the devolved administrations will receive at least £12.7 billion in additional funding. This gives Scotland, Wales and Northern Ireland the budget certainty to for coronavirus response in the months ahead.
For further information please visit gov.co.uk.
Uncertainty
The new Job Support Scheme will replace furlough and last for six months, starting in November. Rishi Sunak said employees must be in “viable” jobs to benefit from the wage top-up scheme.
Under the scheme, if bosses bring back workers part-time, the government will help top up their wages to at least three-quarters of their full-time pay. But only staff who can work at least a third of their normal hours will be eligible.
Employees and businesses in the hospitality, events and retail industries have expressed concern, as have those on zero-hours contracts. People working in industries currently closed may lose out as there isn’t any work. Mr Sunak said he hoped the new plan, announced on Thursday, would “benefit large numbers”, but warned the government “can’t save every job”.
