The Chancellor, Rishi Sunak, delivered his Winter Economy Plan in the House of Commons today (24th September 2020) outlining plans to further support for jobs and businesses across the UK.
With the current furlough scheme closing at the end of October, the main focus of the Chancellor’s announcements were a new Job Support Scheme and an extension to the Self Employment Income Support Scheme, as well as additional flexibilities for businesses who have borrowed money as a result of the pandemic. A summary:
Job Support Scheme
- A new 6-month scheme starting from 1 November 2020.
- This scheme has been designed to support viable jobs and employees must work at least one-third of their hours, paid as normal, in order to qualify for the scheme. The government and employer will then each cover one-third of any remaining hours the employee is not working.
- Employees will therefore forego one-third of their pay for the hours that they have not been working. This means that employees working the minimum one-third of their hours will still receive at least 77% of their pay.
- The level of the grant will be calculated based on an employee’s usual salary but subject to a cap.
- The Chancellor said that the scheme will be open to all small and medium-sized businesses, but larger businesses will only qualify when their turnover has fallen as a result of the pandemic.
- You can still use this scheme even if you have not previously participated in the Coronavirus Job Retention Scheme.
- The previously announced Job Retention Bonus, allowing qualifying businesses to claim a £1,000 for each CJRS participating employee, will remain. Employers can claim both the Job Retention Bonus and funding through the Job Support Scheme.
Self-Employment Income Support Scheme extension
- The Chancellor announced additional help for the self-employed based on similar terms and conditions as the new Jobs Support Scheme.
- The extended scheme will apply for 6 months from 1 November 2020 with an initial taxable grant made available to those who continue to trade and are currently eligible for SEISS.
Loan deadlines extended
- Businesses that have taken out a Bounce Back Loan will be able to benefit from a new Pay As You Grow flexible repayment system. This will include an extension in the loan term from six to ten years.
In response to the Chancellor’s statement, Neil Carberry, Chief Executive of the REC (Recruitment Employment Confederation), said:
“Businesses will welcome much of what the Chancellor has announced. The Job Support Scheme is a big step that is needed in the face of a longer crisis. It’s right to focus on supporting people in work rather than those fully away from jobs that may not be sustainable in the long-term. The detailed design of the scheme should be careful to ensure that it incentivises businesses to keep workers on, not let them go.
“Many firms will breathe a sigh of relief at the cashflow support the Chancellor offered – especially the VAT and loan repayment deferrals. The extension of support for the self-employed is another a key step.
“The disappointing part of today’s announcement was the lack of focus on the new jobs we need to create. Reductions to the cost of employment via NI and action on a more flexible skills system are vital. And as welcome as today’s additional support is, businesses are looking to government to deliver on testing, which is the way to ensure we can fight the virus and keep the economy going. Another full lockdown must be avoided.”
In response the the announcement, my own view is "The new incentives announced are welcomed and should give affected businesses and individuals a degree of certainty as to the level of government assistance available to them. While the next few months are clearly going to be challenging as we navigate through a winter with the pandemic. It is vital that the economy adapts and we continue to keep the country working, protecting jobs and supporting growth and innovation."