The Chancellor, Rishi Sunak, unveiled measures today to protect jobs in the COVID crisis.
“economy is now likely to undergo a more permanent economic adjustment” – Rishi Sunak
Furlough Scheme Replacement
The Job Support Scheme will subsidise the wages of people in work, which will replace the Furlough scheme when it ends at the end of October.
- Businesses will have the option of keeping employees in a job on shorter hours rather than making them redundant.
- Workers will have to work a third of their usual hours, paid by their employers as normal
- When they are not working, the government will pay a third of their usual pay, and the employer will also pay a third of their usual pay
- The treasury says that this means workers will get 77% of their usual pay
- Targeted at small and medium-sized firms, big companies can only use it if turnover has fallen by a third
- From November, the scheme will run for 6 months
- Firms can claim both the jobs support scheme and the jobs retention bonus
- A grant for self-employed workers will be extended on similar terms
Peter Walker from the Guardian suggests that “This sounds very much like the German-style jobs support scheme that many people, including some Conservative MPs, have been seeking from Sunak. It gives extra protection for jobs while allowing the furlough programme to wind down, as had been pledged.”
Pay as you Grow will help companies repay state-backed business loans.
- Loans can be extended from 6 to 10 years. Interest-only payments can be made, and firms in “real trouble” can suspend their payouts
- All of the governments state-backed loan schemes will be extended until the end of 2020, the government is starting work on a new guarantee loan programme to begin in January 2021
- The chancellor will allow businesses to spread their VAT bills over 11 separate payments
The Chancellor says he is cancelling a planned VAT increase (from 5% to 20%), to keep the lower rate of VAT for hospitality and leisure firms until 31st March 2021.
Find out more here: https://www.gov.uk/government/news/chancellor-outlines-winter-economy-plan