Today, Chancellor of the Exchequer gave a speech to the House of Commons – outlining his plans for economic recovery following the completion of the furlough scheme, which will end on October 31.
The Treasury has announced the Winter Economy Plan, which will include the new ‘Job Support Scheme’. From November, for the following six months, the Job Support Scheme will protect viable jobs in businesses who are facing lower demand over the winter months due to COVID-19.
To be eligible to claim on the scheme, employees must work a minimum of 33% of their contracted hours, and the remaining hours of the hours not worked the government and employer will pay a third each. This means that employees working 33% of their hours, they will receive 77% of their pay.
All UK SMEs are eligible, but larger firms must show their turnover has fallen during the COVID-19 pandemic. Employers can use it even if they have not the furlough scheme.
Sunak said that UK businesses will not be able to issue redundancy notices to employees on any government job support scheme, and that there will be restrictions introduced on capital distributions to shareholders for large companies in all sectors. He said: “There will be restrictions on larger companies, in terms of capital distributions to shareholders while they are in receipt of money for their workers on this scheme, and indeed they will not be able to make redundancy notices to those workers who are on this scheme throughout its duration.”
Sunak also introduced the ‘Self-Employment Income Support Scheme’ will be extended. This will support viable traders who are facing reduced demand over the winter months – where the government will cover 20% of the average monthly trading profits via grant funding.
Two of the successful grants schemes that the government have introduced during the pandemic to help businesses have been the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme (CBILS).
During today’s speech, Sunak introduced the Pay As You Grow scheme. For the more than a million businesses that utilised the Bounce Back Loan Scheme and CBILS, they will be offered the choice of more time and greater flexibility for their repayments. The scheme allows businesses to extend their bounce back loans from six to 10 years, reducing the size of their repayments.
Regarding all coronavirus loan schemes, the government has extended the deadline to apply for a grant until 30th November. Further loan schemes will be announced in January 2021.
Sunak also announced that businesses who deferred their VAT will no longer have to pay a lump sum at the end of March next year. They will have the option of splitting it into smaller, interest-free payments over the course of 11 months – benefitting up to half a million businesses. Any of the millions of self-assessed income taxpayers who need extra help, can also now extend their outstanding tax bill over 12 months from January.
Sunak continued to dicuss the future of VAT and announced that the government will continue supporting over 150,000 businesses and protect 2.4 million jobs, by extendeding the 15% VAT cut for the tourism and hospitality sectors to the end of March next year.
1/ Nearly half a million businesses deferred more than £30 billion of VAT this year.
Those payments are all due in one lump sum in March. Instead, I’m allowing businesses to 𝐬𝐩𝐫𝐞𝐚𝐝 𝐭𝐡𝐞𝐢𝐫 𝐕𝐀𝐓 𝐛𝐢𝐥𝐥 𝐨𝐯𝐞𝐫 𝟏𝟏 𝐫𝐞𝐩𝐚𝐲𝐦𝐞𝐧𝐭𝐬, with no interest to pay. pic.twitter.com/1drLhjQZGf
— Rishi Sunak (@RishiSunak) September 24, 2020
The CBI has responded to extra measures set out by the Treasury supporting jobs and businesses this autumn.
Dame Carolyn Fairbairn, CBI Director-General, said: “These bold steps from the Treasury will save hundreds of thousands of viable jobs this winter. It is right to target help on jobs with a future, but can only be part-time while demand remains flat. This is how skills and jobs can be preserved to enable a fast recovery. Wage support, tax deferrals and help for the self-employed will reduce the scarring effect of unnecessary job losses as the UK tackles the virus. Further business rates relief should remain on the table. Employers will apply the same spirit of creativity, seizing every opportunity to retrain and upskill their workers. The Chancellor has listened to evidence from business and unions, acting decisively. It is this spirit of agility and collaboration that will help make 2021 a year of growth and renewal.”
Joss Croft, CEO, UKinbound said “Undoubtedly, today’s announcement will help many tourism businesses and safeguard jobs, which of course is incredibly welcomed, however the desperate needs of British inbound tourism businesses, who bring international visitors to the UK and support tens of thousands of viable jobs, have once again been overlooked.
“These businesses have received no visitors since March, can’t pivot to capture domestic business, continue to be excluded from rate relief and grants and, with so few international visitors, won’t benefit from the extension of the VAT reduction. These businesses are sustainable and will be profitable again, once international tourists can return and are no longer impeded by measures such as quarantine. Whilst we welcome these measures, especially the Jobs Support Scheme, the Government’s one size fits all approach doesn’t work and is having a detrimental effect on these previously profitable companies, which generated £28 billion to the UK economy in 2019.”
Janine Chamberlin, Director at LinkedIn, said: “The furlough scheme has been a lifeline for people all over the country, and today’s announcement will be a welcome relief to many. Leaders have been grappling with the prospect of having to make difficult decisions regarding the future of their businesses and workforce, specifically whether they can keep staff on through the winter months. LinkedIn research of 250+ UK C-level executives found that a quarter were likely to have to make redundancies when the furlough scheme came to an end. Those out of work are facing the toughest jobs market in a generation with LinkedIn data finding that job applications are three times more competitive than last year. To stand out to employers, highlighting skills has never been more important. To help people develop the skills that are needed for today’s in-demand roles, LinkedIn has opened up around 1,000 hours of training which is available to everyone for free.”
Lee Biggins, founder and CEO of CV-Library, commented: “It would have been all too easy for the government to extend the furlough scheme; but we welcome Sunak’s decision to adapt it as we head into the autumn and winter months. The new Job Support Scheme will help to slowly bring professionals back to work; some of whom may have been away from the workplace for as long as six months. It will also provide some respite for workers who may be feeling nervous about their career prospects; while alleviating pressures on employers to make difficult decisions about their workforce.
“Unfortunately, the second wave is well on its way and it’s going to be a difficult period for the UK job market. Already, we’re seeing that people who work in industries that have been hard hit are starting to look for opportunities in different sectors; and application rates have soared massively. While more job opportunities are popping up every day, competition is rife, especially as people have been panicking about job security. The new measures may well be delaying the inevitable of mass unemployment, but they will certainly be welcomed by workers and employers alike.”