Chancellor unveils support for businesses in COVID-19 Tier Two regions
The Chancellor of the Exchequer, Rishi Sunak has unveiled increased support packages for businesses and employees who have been impacted by the COVID-19 restrictions in tier two areas.
Sunak announced major changes to the Job Support Scheme (JSS) – set to replace furlough in November – will be added to the tier two regions across the UK. The changes have come as a result of many businesses in tier two areas complaining that they would be better off if they in a tier three area.
Changes to the JSS scheme mean that instead of a minimum requirement of paying 55% of wages for a third of hours, companies will now have to pay for a minimum of 20% of usual hours worked, and 5% of hours not worked. The government will pay 62% of the wages for hours not worked by employees. Maximum payment per employee has been increased to £1,541.75. The scheme is open to SMEs and large companies that can show an impact on revenues.
In a speech to the commons, Sunak said: “I’ve always said that we must be ready to adapt our financial support as the situation evolves, and that is what we are doing today. These changes mean that our support will reach many more people and protect many more jobs.”
Dame Carolyn Fairbairn, CBI Director-General, said: “The Job Support Scheme will be a welcome and much-needed successor to the furlough scheme and will protect many livelihoods when it begins. It’s right that businesses contribute if they wish to access this scheme. But with a tough winter ahead, significantly increased Government contributions to non-worked hours across all regions will do even more to protect people’s livelihoods.
“The missing middle of pubs, cafes and theatres in tier 2 along with other businesses across the UK who are seeing demand fall away, but with little extra support, will be relieved to see that anomaly come to an end. Meanwhile it’s great to see the extra grant funding give local authorities the discretion to target where support is needed most. This is a big step towards a more standardised approach of support for areas going into tiers 2 and 3 and those businesses that face tough times who operate within them. It will be critical to get the buy-in of all regions in England, rather than negotiation on a case-by-case basis.
“Looking beyond the immediate fire-fighting, the Chancellor will need to look at ways of stimulating business investment and innovation which will be key to how the economy thrives once again.”
Alan Price, CEO of BrightHR said: “Another day, another important government announcement about coronavirus. Since the new Job Support Scheme was announced several weeks ago as the replacement to the outgoing furlough scheme for coronavirus business support, criticism has been levelled at the government that it did not go far enough. Now, with just under two weeks to go until the scheme is set to be rolled out across the UK, it seems that the Chancellor has listened to these concerns.
“Today’s amendment to the scheme focuses on companies that can remain open despite coronavirus restrictions, such as those in tiers 1 and 2 or those in tier 3 which have not been told to close entirely. As before, employees will still need to work for a portion of their normal hours, with the government and their employer funding their wage for some of the time they do not work. Applying to all businesses across all three tiers, the Chancellor’s announcement now means that companies will need to contribute less to the scheme than expected previously, with the government instead covering most of the bill from their end. Employees will also need to work fewer hours to qualify for it.
“This will likely come as welcome news for businesses, helping them to keep their wage costs further down as government support is ramped up. It does also offer more incentive to employers to keep staff on, with their employer needing to provide them fewer hours in which to work. Again, the government’s focus does seem to remain on preserving as many jobs as possible during the winter months.
“All eyes will now turn to the government to finally release detailed guidance surrounding the use of the scheme, which will hopefully clarify many of the questions that still need to be answered. In the meantime, employers should carefully consider if this announcement will provide them with the life-line they required, or if even with these changes the scheme simply will not help them to the degree they need and alternatives, such as redundancies, are necessary.”
Luke Davis, CEO and Founder of SME investment specialists, IW Capital, has commented on the announcement: “This package announced today could be the lifeline that many small businesses have been calling out for, helping them keep on staff and keep operating during the new restrictions. Businesses have been incredibly resilient and small business owners, in particular, should be praised for the work they have done over the course of the year. Small businesses represent 99% of the UK economy and employ over 60% of the working population, so this support is crucial to the continued success and the overall health of the UK economy. For those that are not only looking to stay afloat but grow, private investment into SMEs remains strong, at IW Capital, have seen a marked increase in the amount invested into high-growth SMEs during the Coronavirus pandemic.”
Peter Cheese, CEO of the CIPD, the professional body for HR and people development, said: “We welcome the Government’s changes in making JSS Open more flexible and significantly increasing its contribution to wage costs, while reducing the amount that employers have to contribute. Our research with employers found that in its previous form, the JSS would have been unlikely to save a significant number of jobs, so hopefully these changes will help reduce employers’ redundancy plans.
“However, the latest changes to the Job Support Scheme are very confusing for employers, given the new scheme is being introduced in ten days’ time, before the guidance on the now obsolete part-time Job Support Scheme had even been published.
“It is crucial that guidance for employers on the new scheme is available as soon as possible. Small firms in particular will struggle to get to grips with the details of the new scheme, while there will be real challenges for a business that has outlets throughout England or in the other nations under different tier restrictions and have to claim under both the JSS Open and JSS Closed.
“Longer-term Government needs to simplify its approach to wage subsidy support to create one clearly understandable national scheme that provides a base level of sufficient support for all worst hit firms with criteria restricting it to those most affected by the pandemic.”