Chancellor Rishi Sunak today announced his Winter Economy Plan, including a new emergency jobs scheme to protect jobs during the coronavirus (COVID-19) downturn this winter. We outline below some of the key points but to receive a copy of our latest newsletter containing a full briefing, do feel free to sign up here.
The Jobs Support Scheme, which will replace the furlough scheme when it ends on 31 October, will see workers get up to 77% of their normal salaries for six months, effectively offering businesses the option of keeping employees in a job on shorter hours, rather than making them redundant.
The Chancellor said that employees will have to be working for at least a third of their normal hours to qualify for the new scheme, which begins on 1 November. Between them, the government and the employer will then cover part of their salary for the remaining hours not worked. The government will cover a third of this sum, capped at £697.92 per month, while firms cover a further third.
The Jobs Support Scheme is designed to sit alongside the Jobs Retention Bonus which offers a one-off payment to employers of £1,000 for every employee who they previously claimed for under the original Jobs Retention Scheme, and who remains continuously employed through to 31 January 2021.
In addition, the Government is extending the Self Employment Income Support Scheme Grant (SEISS) – a third grant will cover three months’ worth of profits for the period from November to the end of January 2021. This will be worth 20% of average monthly profits, up to a total of £1,875.
Mr Sunak also announced that businesses that have borrowed money through the government’s coronavirus loan schemes will be given more time to repay the money, extending the current terms from 6 years to 10 years, almost halving repayments. Interest-only payments can be made, and firms in “real trouble” can suspend their payouts.
The VAT cut for hospitality and tourism companies will also be extended until March – the cut from 20% to 5% VAT – which came into force on 15 July – had been due to expire on 12 January next year.
Mr Sunak said: ‘The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery. Our approach to the next phase of support must be different to that which came before.
‘The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve.’