Industry Mega-Poll to Track Impact of PI Insurance Crisis

by Iain McIlwee | 17 Feb, 2021 | Building Safety Act, Insurance

Companies from across the industry are being asked to take part in the biggest ever review of construction’s growing professional indemnity insurance crisis.

In recent years firms from across the industry have reported sharp increases in premiums for PI insurance, while also seeing stricter curbs on the levels of cover. Some firms have reported four-fold increases in policy costs, while others have said that they can no longer secure cover.

This has been driven by multiple factors including a response to higher historic claims from the sector, as well as a cyclical hardening of the insurance market.

The Construction Leadership Council is planning steps to relieve the crisis. This includes developing a robust evidence base, identifying in detail the areas where the
industry is facing the most significant difficulties. The CLC is asking for companies from across the industry to take part in an on-line survey

It asks companies to provide confidential feedback on the costs and policy exclusions that they have experienced when renewing their cover. The poll is entirely confidential, but firms are asked to indicate
their type of business to help target any future support on those areas of greatest need.

Construction Leadership Council Professional Indemnity Insurance Group lead Samantha Peat said: “The Covid-19 pandemic has dominated headlines for the last year, but there is a second crisis that has been quietly growing for businesses across our industry.

“We are speaking to the UK Government and insurers to find ways to help businesses that could otherwise face an uncertain future due to the nature of their PI renewals. We want businesses from across the industry to give us their views – whether you are affected or not – to help us shape the way we prepare a response from the whole sector.

CLC chair Andy Mitchell said: “We have seen in the last year that our industry can deliver real positive change when we work together to tackle shared challenges. Given the feedback from across construction about the difficulties faced by companies, I want to strongly encourage companies to take part in this survey, letting us know about their experiences”

FIS CEO, Iain McIlwee added, “It is good to see CLC drilling down into this issue, we have growing concerns that the market for PI cover is breaking. Companies are being charged more and more for cover that covers less and less and this is now a regular part of our discussions with members. With the number of underwriters willing to look at construction having reduced in recent years, it is only getting worse. Integrated Project Insurance is still scarce, but potentially offers a more effective way of managing our insurable risks – it aligns the insurance to the risk management process, it has added benefits of encouraging earlier engagement and a more collaborative approach to construction. Whatever the solution, something needs to be done as we are heading into an insurance crisis.”

The survey will be live until 12 March 2021. Industry-level details of the results will be published by Construction Leadership Council and will be used to inform ongoing work to support the sector.

FIS is encouraging all members of our community to complete the on-line survey here

The Construction Leadership Council welcomes the Expansion of the Building Safety Fund

by Iain McIlwee | 15 Feb, 2021 | Building Safety Act, Insurance

The Construction Leadership Council (CLC) welcomes the announcement made recently by the Housing Secretary, Rt Hon Robert Jenrick MP on expansion of the Building Safety Fund. This included full funding for the removal of unsafe cladding for leaseholders in all residential buildings 18 metres and over (6 storeys) in England; and a finance scheme to provide reassurance for leaseholders in buildings between 11 and 18 metres (4 to 6 storeys).

The CLC recently submitted an industry wide response ahead the Chancellor’s Budget Statement on 3 March 2021. This focussed on a small number of key interventions including an increase in the funding for the Building Safety Fund to cover the remediation of all eligible buildings and other matters.

Government and industry must continue to work together to ensure the tragedy of the Grenfell Tower fire does not happen again.

The majority of this work is being led by the Ministry of Housing, Communities and Local Government (MHCLG) through their Building Safety Programme and is structured around four key areas: identification of unsafe buildings, making those buildings safe, identifying system problems, and fixing the system.

The construction industry must play its part too and there is already significant work underway.

The Construction Leadership Council Building Safety workstream aims to support CLC and industry engagement with the Grenfell Inquiry, Building Safety Programme, new regulatory bodies and wider work for the built environment. Key objectives include identifying the intersections between the core work of the CLC and Building Safety Programme, where appropriate enhancement and contribution to key building safety regime objectives and driving industry awareness and understanding – key is leadership and culture change both in the immediate (new and existing High Risk Residential Buildings buildings) and longer term for the entire industry.

Over the past two years the Competence Steering Group (CSG) has assembled a coalition of organisations from across the built environment and fire industries together with organisations representing building owners and managers. Their aim was to come up with a blueprint to improve competence for those working on higher-risk buildings, and drive a culture change right across the industry.

The group has produced 2 reports – Raising the Bar published in August 2019 and Setting the Bar published in October 2020. The work was initiated by the recommendations in Dame Judith Hackitt’s review Building a Safer Future. Since the publication of the ‘Setting the Bar’, the CSG and its 13 Working Groups have consulted widely and taken on board feedback as they have continued to develop sector frameworks. These frameworks will provide the skills, knowledge, experience and behaviours needed to carry out specific roles, and deliver a more rigorous approach to the essential training and assessment that is required.

In addition, MHCLG has commissioned the National Standards Body, BSI, to develop the National Standards for the overarching competence framework and accompanying Publicly Available Specifications (PAS) standards for the three regulated roles of Principal Designer, Principal Contractor and Building Safety Manager.

Improved product safety is also a key part of building safety reforms. Work has been ongoing over the past few years to ensure that the products that go into buildings are safe and therefore buildings are safe. This work has been aligned with the recommendations in Dame Judith Hackitt’s 2018 report Building a Safer Future and the draft building safety bill published by MHCLG in July 2020. This includes the industry development of a code for construction product information, led by the Construction Products Association’s Marketing Integrity Group. The aim of the code is to have a robust and consistent approach to how construction product information is communicated. The draft code proposes the principles of clear, accurate, up to date, accessible and unambiguous information through 11 clauses.

Throughout 2021, the Building Safety workstream will look to share and update the industry via the CLC website on key work and announcements. Most recent activity includes:

The Government has announced a new national regulator for construction products operating within the Office for Product Safety and Standards (OPSS). An independent review has also commissioned to examine weaknesses in previous testing regimes for construction products, and to recommend how abuse of the testing system can be prevented.
Launch of the industry consultation on a proposed new code for construction product information.
Recent article by Graham Watts, Chief Executive of the Construction Industry Council, a Member of the MHCLG Industry Response Group and Chair of its Competence Steering Group.

All in the industry must engage and play their part to improve.

Iain McIlwee FIS CEO added “It is clear that the industry is needs to pull out all of the stops to ensure that profound changes to culture and process happen, but for me the fund still falls short of attacking the problem head on. Cladding is but one issue, it is not addressing the wider aspects that were uncovered in Grenfell and previous disasters. It also concerns me that there is now talk of a levy on development, which could potentially impact funding for future works. For me we are still looking at systemic failure – the Building Safety Fund needs to be more ambitious and better targeted. The Pension Protection Fund offers a good parallel and has been effective in targeting and overcoming A more thinly spread levy, linked to e.g. Insurance Premium Tax that does not leave lease-holders with debilitating loans and further angst”.

FIS Three Steps to Rebuilding Construction

Supreme Court judgment in FCA’s business interruption insurance test case

by Iain McIlwee | 19 Jan, 2021 | Insurance, Main News Feed

In what may well be good news for some companies in the Finishes and Interiors Sector, The Supreme Court has substantially allowed the Financial Conduct Authority’s (FCA) appeal on behalf of policyholders. This completes the legal process for impacted policies and means that many thousands of policyholders will now have their claims for coronavirus-related business interruption losses paid. The impact of this judgement on covering costs associated with the delay in start or abandonment of construction projects is yet to be fully uncovered, but below we explore what the judgement means and how to start assessing your policy.

Background

Many policyholders whose businesses were affected by the Coronavirus pandemic suffered significant losses, resulting in large numbers of claims under business interruption (BI) policies.

Most SME policies are focused on property damage and only have basic cover for BI as a consequence of property damage. But some policies also cover BI from other causes, in particular infectious or notifiable diseases (‘disease clauses‘) and prevention of access and public authority closures or restrictions (‘prevention of access clauses‘). In some cases, insurers have accepted liability under these policies. In other cases, insurers have disputed liability while policyholders considered that they had cover leading to widespread concern about the lack of clarity and certainty.

The FCA’s aim in bringing the test case was to urgently clarify key issues of contractual uncertainty for as many policyholders and insurers as possible. The FCA did this by selecting a representative sample of 21 types of policy issued by eight insurers. The FCA’s role was to put forward policyholders’ arguments to their best advantage in the public interest. 370,000 policyholders were identified as holding 700 types of policies issued by 60 insurers that may be affected by the outcome of the test case.

The High Court’s judgment last September resolved most of the key issues but, because we were unable to reach agreement, insurers and the FCA made ‘leapfrog’ appeals to the Supreme Court (without going to the Court of Appeal first).

What does the judgement determine

The Supreme Court judgment is complex, runs to 112 pages and deals with many issues. In summary, the FCA argued for policyholders that the ‘disease’ and ‘prevention of access’ clauses in the representative sample of 21 policy types provide cover in the circumstances of the coronavirus (Covid-19) pandemic, and that the trigger for cover caused policyholders’ losses.

The High Court’s judgment last September said that most of the disease clauses and certain prevention of access clauses (12 policy types from the sample of 21, issued by six insurers) provide cover and that the pandemic and the Government and public response caused the business interruption losses. The six insurers appealed those conclusions for 11 of the policy types, but the Supreme Court has dismissed those appeals, for different reasons from those of the High Court.

It should be noted that the judgment focussed primarily on policies where notifiable diseases were not specified. It remains the case that the majority of business insurance policies specify covered diseases, with COVID-19 typically not included, and hence they do not provide cover for business interruption in respect of the Covid-19 pandemic.

On the FCA’s appeal, the Supreme Court ruled that cover may be available for partial closure of premises (as well as full closure) and for mandatory closure orders that were not legally binding; that valid claims should not be reduced because the loss would have resulted in any event from the pandemic; and that two additional policy types from insurer QBE provide cover. This will mean that more policyholders will have valid claims and some pay-outs will be higher.

The FCA’s legal have published a bulletin on their website, which may be referred to for further detail.

What today’s judgment means for policyholders

This does open wider potential for claims within the Finishes and Interiors Sector as the judgment brings to an end legal arguments under 14 types of policy issued by six insurers, and a substantial number of similar policies in the wider market which will now lead to claims being successful.

The test case was not intended to encompass all possible disputes, but to resolve some key contractual uncertainties and ‘causation’ issues to provide clarity for policyholders and insurers. The judgment does not determine how much is payable under individual policies, but provides much of the basis for doing so.

Following the High Court’s judgment, insurers decided to pay claims on some policies and the FCA has asked insurers to progress claims on other policies that the High Court said provided cover so that they could be settled quickly following the appeals to the Supreme Court.

Each policy needs to be considered against the detailed judgment to work out what it means for that policy. Policyholders with affected claims can expect to hear from their insurer soon.

Next steps

In short, check your wording – if you have “disease clauses” or “prevention of access clauses” that referenced notifiable diseases without specifying the diseases which were covered and you can identify a quantifiable loss then you may be able to make a claim. If this is the case, make contact with your broker and explore with them the potential and how to structure your claim. Remember – Policyholders with questions should approach their broker, other advisers or insurer. Policyholders who remain unhappy following their insurer’s assessment of their claim may be able to refer their claim to the Financial Ombudsman Service, whose role is to resolve individual disputes.

If you need a second opinion or wish to discuss you clause/claim, please contact the FIS on 0121 707 0077 or sent outline details (including policy wording and an outline of what you believe you claim entitles you to) to info@thefis.org and we can arrange to have the policy reviewed.

The Supreme Court’s judgment will be distilled into a set of declarations. The FCA and Defendant insurers are working as quickly as possible with the Supreme Court to enable the Court to issue its declarations.

The FCA will publish a set of Q&As for policyholders to assist them and their advisers in understanding the test case. The FCA will also publish a list of BI policy types that potentially respond to the pandemic based on data that we will be gathering from insurers.

The FCA has published draft guidance for policyholders on how to prove the presence of coronavirus, which is a condition in certain types of policy. The consultation closes on 18 January, but the FCA is extending the closing date to 22 January only for any supplemental comments arising from the judgment. The FCA will issue finalised guidance as soon as possible after that.

The FCA will continue to keep policyholders appraised of matters as they progress, through its dedicated webpage.

Additional Information

The judgment is available on the Supreme Court’s website.

Details of Brexit Deal published and new guidance emerging to support businesses

by Iain McIlwee | 29 Dec, 2020 | Insurance, Main News Feed

Details of the Brexit deal are now available. The 1,246-page deal has finally been published along with a helpful summary document. The Deal will need to be ratified in both the EU and UK, with Parliament set to sit on the 30th December. Plans are already in place for Parliament in the UK to allow ratification in a single day and given the strong majority held by the Tory Party and that Labour are likely to support (or worst case abstain), it is likely to pass through the House in time for the 1st January transition.

The European Parliament will not have time to ratify a deal before 1 January, so any agreement would be provisional with Members of the European Parliament (MEPs) voting retrospectively at some point in the new year. Further fine tuning is likely in the New Year.

Key elements of the deal

The agreement is set to deliver a common baseline of regulations and a commitment to minimise technical barriers of trade. The Deal is sets down a framework for future co-operation, with much of the Agreement covering governance and dispute resolution that will support further detailed negotiations in the future. The UK and EU have agreed an independent mechanism to resolve matters if one side diverges too far from common standards, with this bringing with it the prospect of tariffs in the future if agreement is not reached.

Key elements of the deal relevant to the Finishes and Interiors Sector centre on zero-tariffs and quotas. Whilst this won’t constitute frictionless trade, it is will reduce some of the bureaucracy anticipated. New rules will include Relevant Rules of Origin declarations and certain customs checks, which will vary according to the goods being traded. These will be mitigated by the potential to self certificate by allowing self certification of conformity for regulatory compliance by manufacturers and enabling “Authorised Economic Operators” to manage customs arrangements.

The agreement does not include mutual recognition of conformity assessments and plans will continue for the introduction of UKCA and UK NI Marking with companies still having to use EU Notified bodies for the purposes of CE Marking and UK Approved Bodies for UKCA marking (see FIS Guidance on Product Marking here).

The deal does not address concerns related to Movement of Labour and the FIS remains concerned about the short to medium term impact of the new Points Based System and will continue to press this. The Deal does not bring in visas for short term travel from 1st January, but does not preclude it for the future. For UK Nationals living in the EU there is an “equivalent” settled status right that will be available (with arrangements differing between individual member states).

Business Travel is also covered by mutual obligation to cover short-term business travel, subject to certain conditions (new advice has been published in the list below).

The Deal also does not go as far as some had hoped on transfer of data, but new guidance has been published below and change will be phased in over 6 months to support transition.

Despite this positive development, delays at ports are still anticipated and companies are advised to review the contractual implications and ensure that they have protected themselves adequately within their T&C’s. Further advice included in the FIS Brexit Toolkit.

New/Updated Guidance Published to support Businesses in preparing for Transition

Relevant Rules of Origin (RoO)

With the signing of the UK-EU Trade and Cooperation Agreement, the vast majority of traders moving goods between the UK and EU will avoid paying tariffs on that trade. In order to avoid paying tariffs, all traders must – from 1 January – ‘claim preference’ by way of meeting the relevant rules of origin (RoO) for their products and making a declaration to that effect.

Businesses should ensure that the following actions are carried out as soon as possible so that they are ready to use the Agreement:

Check the rules that are applicable to their products to ensure that the products are originating in either the UK or EU and can therefore be traded on preferential terms. The general rules are found in Chapter 2 of the Trade and Cooperation Agreement and the ‘Product Specific Rules of Origin’ are contained in Annex ORIG-2;
Consult accompanying GOV.UK guidance;
Make sure they and their EU suppliers/customers have agreed whether a claim will be based on an exporter’s declaration or on the importer’s knowledge, informing customs agents as appropriate; and
Get ready to make the appropriate statement on the commercial and customs documentation for all consignments being traded on and after 1 January.

The relevant GOV.UK guidance on claiming preference, including links to the Agreement itself and information about customs codes etc., can be found here. This will be supplemented with longer-form guidance on RoO in the agreement. This should be linked to from the same webpage as soon as it is published.

Every business should consult the Agreement itself and the official guidance linked to above before acting.

To benefit from preferential tariffs when importing into the UK from the EU (or importing into the EU from the UK), the importer will be required to declare they hold proof that the goods comply with the rules of origin.

You’ll be entitled to claim the preferential rate of duty if you have either:

a statement on origin that the product is originating made out by the exporter; or
the importer’s knowledge that the product is compliant.

If you’re delaying your declarations for goods imported into the UK from the EU you only need to declare a proof of origin when you make your supplementary declaration. A claim for preferential tariff treatment and the basis for that claim shall be included in the customs import declaration in accordance with the laws and regulations of the importing Party.

If using an exporter’s statement, that statement shall be made out using one of the language versions set out in ANNEX ORIG-4 of the Agreement, in an invoice or on any other commercial document that describes the originating product in sufficient detail to enable the identification of that product. The English language version is below.

The exporter shall be responsible for providing sufficient detail to allow the identification of the originating product. A statement on origin shall be valid for 12 months from the date it was made out or for such longer period as provided by the Party of import up to a maximum of 24 months.

A statement on origin may apply to:

a single shipment of one or more products imported into a Party; or
multiple shipments of identical products imported into a Party within the period specified in the statement on origin, which shall not exceed 12 months.

Example Statement of origin

Importing and Exporting

Rules of Origin: Check your goods comply to trade tariff-free with the EU: With a trade deal in place, UK businesses can trade tariff-free with the EU from 1 January if their products meet agreed Rules of Origin. UK traders need to check if their products comply and how to prove they originate. For more information, click here.

Changes to approved exporter authorisations from 1 January 2021: Guidance has been issued about approved exporter authorisations which are issued in the UK no longer being valid in EU countries from 1 January 2021. For more information, click here.

Declaring reusable packaging for Great Britain imports and exports from 1 January 2021: From 1 January 2021, reusable packaging will require an import or export declaration. You may be able to make a declaration at the border (known as a ‘declaration by conduct’) instead and provide information to HMRC on a quarterly basis. For more information, click here.

VAT and overseas goods sold directly and online to customers in the UK from 1 January 2021: Guidance on how sellers will deal with VAT for goods from overseas that they sell to customers in the UK from 1 January 2021 has been updated to include information about selling goods to Northern Ireland. For more information about selling goods directly to customers click here. For more information about selling goods in the UK using online market places, click here.

Check what declarations need to be made for goods you send from the UK or bring or receive into the UK from 1 January 2021: From 1 January 2021, if you are a UK-based business sending goods from Great Britain or Northern Ireland or if you’re a UK-based business bringing or receiving goods into Great Britain or Northern Ireland check what declarations may need to be made. For more information about goods you send, click here. For more information about goods you bring or receive into GB or NI, click here.

Check when you can account for import VAT on your VAT return from 1 January 2021: Guidance has been updated with information added about accounting for VAT if you do not know the full customs value of goods and using someone to import goods on your behalf. For more information, click here.

Carry out international road haulage from 1 January 2021: Guidance has been updated to include information about the journeys you can make in the EU, including cross-trade and cabotage jobs, what you’ll need ECMT permits for, and vehicle insurance green cards. For more information, click here.

EU business: Taxes, tariffs and importing from the UK: Guidance has been updated to show that from January 1 2021, the EU and UK Trade and Cooperation Agreement establishes zero tariffs or quotas on trade between the UK and the EU, where goods meet the relevant rules of origin. For more information on taxes and tariffs click here. For more information for EU businesses importing from the UK, click here.

List of customs agents and fast parcel operators: For more information, click here.

Moving Goods

Claiming preferential rates of duty between the UK and EU from 1 January 2021: Guidance has been added explaining how to claim preferential rates of duty on goods covered in the UK’s deal with the EU and how to declare goods imported into the UK on your import declaration. For more information, click here.

Goods Vehicle Movement service: If you are a haulier that moves goods through one or more ports that uses the Goods Vehicle Movement Service, you should apply to use Goods Vehicle Movement Service. To register for the Goods Vehicle Movement Service click here. To get a goods movement reference using the service, click here. To check that a goods movement reference is valid and if goods can be moved, click here.

How to use your ATA Carnet: Guidance about how the ATA Carnet works, what to do at customs, and what happens if your goods are lost, destroyed, or stolen, has been updated in respect of UK Transition. For more information, click here.

ECMT international road haulage permits: Guidance has been updated to explain why you need ECMT permits in 2021, and how to buy short-term (30-day) permits to use in January and February 2021 if you want to make a third cross-trade movement. For more information, click here.

Northern Ireland

NEW: Starting and ending transit movements in Northern Ireland using common and Union transit: Guidance to assist you in finding out what you need to do if you start and end transit movements in Northern Ireland using common and Union transit has been published. For more information, click here.

Using CHIEF for declaring goods into or out of Northern Ireland: From 1 January 2021, find out when you will still be able to use CHIEF (for a limited period of time) for declaring goods into or out of Northern Ireland. For more information, click here.

UPDATED: Moving qualifying goods from Northern Ireland to the rest of the UK from 1 January 2021: Guidance has been updated with information added about goods for which specific conditions apply when moved from NI to GB, and placing qualifying goods on the market in GB. For more information, click here.

Apply for authorisation for the UK Trader Scheme if you bring goods into Northern Ireland from 1 January 2021: Guidance has been updated with Information about if you supply goods to a business in Northern Ireland but do not have a fixed address in Northern Ireland. For more information, click here.

Marketing Goods

Product safety and metrology: Guidance has been updated with new guides for Great Britain and Northern Ireland added on Regulation 765/2008 on Accreditation and Market Surveillance. For more information on Great Britain guidance, click here. For more information on Northern Ireland guidance, click here.

Guidance has also been updated to include a guide on ‘UK product safety and metrology: What’s changed from 2 January 2021 in relation to Great Britain?’. For more information, click here.

Placing manufactured goods on the EU market from 1 January 2021: Guidance has been updated to note that the UK conformity assessment bodies will no longer be able to carry out mandatory conformity assessment for products being placed on the EU market. For more information, click here.

Personal Data

Using personal data in your business or other organisation from 1 January 2021: Guidance has been added to include information on the EU-UK Trade and Cooperation Agreement interim bridging mechanism for personal data. For more information, click here.

Business Services

UPDATED: Providing services and travelling for business from 1 January 2021: Guidance has been updated to reflect the changes created by the UK and EU Trade and Cooperation Agreement for the following countries: Norway, Bulgaria,Latvia, Belgium, Italy, The Netherlands,Ireland, Malta, Switzerland, Iceland, Austria, Hungary, Greece, Germany, Slovenia, Romania, Denmark, Luxembourg, France, Finland, Estonia, Sweden, Spain, Slovakia, Czech Republic, Portugal Cyprus, Poland, Croatia, Lithuania and Liechtenstein.

Trade with non-EU countries

After 31 December 2020, EU trade agreements will not apply to the UK. This is the case regardless of the agreement with the EU. The UK has signed trade agreements with various countries and trading blocs. For more information on signed trade agreements and trade agreements still in discussion, click here

We will share the further guidance as soon as we can. If you have any questions after reviewing the Treaty text or existing guidance, please contact iainmcilwee@thefis.org

If not seen already and you are keen to find out about other aspects of the Deal, the general clauses are summarised here.

You can access the full 1,246 pages of the deal here

You can access the FIS Brexit Toolkit here.

Chancellor extends furlough and loan schemes

by Iain McIlwee | 17 Dec, 2020 | Insurance, Main News Feed

In a move to ensure firms can access the support they need through continuing economic disruption, Rishi Sunak also confirmed he would be extending the government-guaranteed Covid-19 business loan schemes until the end of March.

These changes come ahead of the Budget, which the Chancellor has confirmed will take place on 3 March 2021. This will deliver the next phase of the plan to tackle the virus and protect jobs, so the extensions to the business loan and furlough schemes enable businesses to plan with certainty and access support in the first few months of the New Year ahead of the further update on wider Covid-19 economic support.

So far, the Coronavirus Job Retention Scheme (CJRS) scheme has protected 9.6 million jobs across the UK with more than one million businesses accessing loans to help them through the crisis.

Chancellor of the Exchequer Rishi Sunak said:

“Our package of support for businesses and workers continues to be one of the most generous and effective in the world – helping our economy to recover and protecting livelihoods across the country.

“We know the premium businesses place on certainty, so it is right that we enable businesses to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our Plan for Jobs.”

Business Secretary, Alok Sharma, said:

“While our loan schemes have provided a vital lifeline to millions of firms across the country, we know that business owners need additional certainty as we head into the New Year.

“Extending government-backed loan schemes will give companies right across the UK the finance they need to support, protect and create jobs as we build back better from the pandemic.”

The Chancellor said he would review the employer contribution element of the CJRS in January, but decided to bring this forward to allow businesses to plan ahead for the remainder of the winter and the New Year.

The government will continue to pay 80% of the salary of employees for hours not worked until the end of April. Employers will only be required to pay wages, National Insurance Contributions (NICS) and pensions for hours worked; and NICS and pensions for hours not worked.

The eligibility criteria for the UK-wide scheme will remain unchanged and these changes will continue to apply to all Devolved Administrations.

Extending the scheme until the end of April means businesses across the country will have certainty about what support will be available to them.

Businesses will also be given until the end of March to access the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, and the Coronavirus Large Business Interruption Loan Scheme. These had been due to close at the end of January.

The schemes have already provided over £68 billion in guaranteed loans, and helped to keep afloat business in all sectors of the UK economy who have been impacted by coronavirus.

We are extending the schemes now, ahead of Christmas and further into the new year, to ensure that businesses can continue to access the support they need to grow and recover.

The government has already announced that more support will be available beyond March, through a successor loan scheme. More details of the scheme will be announced in due course, with the government providing a further update on wider Covid-19 economic support at the Budget on 3 March.

The furlough and loan schemes are part of the government’s wider plan to support, create and protect jobs through its Plan for Jobs. This includes the Kickstart Scheme, more investment in training and skills as well as the Self Employment Income Support Scheme grant, with a fourth grant being made available from February to April 2021.

Applying for a CBILS interruption loan

More on the Coronavirus Job Retention Scheme

Visit the FIS COVID-19 Hub

Government extends Furlough to March and increases self-employed support

by Iain McIlwee | 5 Nov, 2020 | Insurance, Main News Feed

Workers across the United Kingdom will benefit from increased support with a five-month extension of the furlough scheme into Spring 2021, the Chancellor announced today, 5 November.

The Coronavirus Job Retention Scheme (CJRS) will now run until the end of March with employees receiving 80% of their current salary for hours not worked.

Similarly, support for millions more workers through the Self-Employment Income Support Scheme (SEISS) will be increased, with the third grant covering November to January calculated at 80% of average trading profits, up to a maximum of £7,500.

The Chancellor of the Exchequer Rishi Sunak said:

I’ve always said I would do whatever it takes to protect jobs and livelihoods across the UK – and that has meant adapting our support as the path of the virus has changed.

It’s clear the economic effects are much longer lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support.

Extending furlough and increasing our support for the self-employed will protect millions of jobs and give people and businesses the certainty they need over what will be a difficult winter.

The Chancellor also announced today an increase in the upfront guarantee of funding for the devolved administrations from £14 billion to £16 billion. This uplift will continue to support workers, business and individuals in Scotland, Wales and Northern Ireland.

The furlough scheme was initially extended until 2 December. But the government is now going further so that support can be put in place for long enough to help businesses recover and get back on their feet – as well as giving them the certainty they need in coming months. Evidence from the first lockdown showed that the economic effects are much longer lasting for businesses than the duration of restrictions.

There are currently no employer contribution to wages for hours not worked. Employers will only be asked to cover National Insurance and employer pension contributions for hours not worked. For an average claim, this accounts for just 5% of total employment costs or £70 per employee per month. The CJRS extension will be reviewed in January to examine whether the economic circumstances are improving enough for employers to be asked to increase contributions.

Throughout the pandemic, the government has acted with speed to protect lives and safeguard jobs with an unprecedented £200 billion support package. The furlough scheme has protected over nine million jobs across the UK, and self-employed people have already received over £13 billion in support. This is in addition to billions of pounds in tax deferrals and grants for businesses.

On top of this, the government has announced:

cash grants of up to £3,000 per month for businesses which are closed worth more than £1 billion every month
£1.1 billion is being given to Local Authorities, distributed on the basis of £20 per head, for one-off payments to enable them to support businesses more broadly
plans to extend existing government-backed loan schemes and the Future Fund to the end of January, and an ability to top-up Bounce Back Loans
an extension to the mortgage payment holiday for homeowners
up to £500 million of funding for councils to support the local public health response.

The full speech from the Chancellor is available here.
Visit the FIS COVID-19 Hub here.