Chancellor Rishi Sunak has today announced his new Winter Economy Plan featuring a new Jobs Support Scheme to replace the existing furlough scheme.
The Job Support Scheme
Starting in November, the scheme will run for six months.
It will be available for employees working at least a third of their normal hours, who are being paid for that as normal. Employers and government will be jointly responsible for incresing their wages to cover two-thirds of their lost pay.
Through the scheme, employers will continue to pay the wages of staff for the hours they work. For the hours not worked, the government and the employer will each pay one third of their equivalent salary. This means employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they can’t work.
In order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
All small and medium-sized businesses are eligible, however larger organisations must be able to show that their turnover has declined during the pandemic. It is designed to sit alongside the Jobs Retention Bonus and could be worth over 60% of average wages of workers who have been furloughed – and are kept on until the start of February 2021. Businesses can benefit from both schemes in order to help protect jobs.
Support for the Self Employed
Government is continuing its support for millions of self-employed individuals by extending the Self Employment Income Support Scheme Grant (SEISS). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.
An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April – ensuring our support continues right through to next year. This is in addition to the more than £13 billion of support already provided for over 2.6 million self-employed individuals through the first two stages of the Self Employment Income Support Scheme – one of the most generous in the world.
Additonal Support Measures
Businesses that succesfully applied for a BounceBack loan can now extend their terms from six to 10 years as part of the “pay as you grow” scheme. This aims to help cashflow allowing payments to be reduced.
If a business is in real trouble, then they can opt for interest-only payments or suspend repayments for six months. It has been confirmed that credit ratings will be unaffected.
The government guarantee on Coronavirus Business Interruption Loans will be extended to 10 years and a new successor loan guarantee programme will be announced in January.
In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes until the end of November.
Businesses that deferred their VAT payments earlier this year will now have the option to repay in 11 interest‐free instalments during the 2021‐22 financial year, rather than in one lump sum at the end of March 2021, to help with cashflow.
You can read the full Winter Economy Plan outline report here