Below we will set out the salient points of Rishi Sunak’s what he calls his “Winter Economy Plan” to protect jobs as the UK and the rest of the world continue to fight the Covid-19 pandemic.
The Chancellor unveiled the measures yesterday September 24th. The PM has also warned that the latest Covid-19 restrictions could last up to six months.
These are the key coronavirus announcements from the Chancellor’s Commons address:
- A new jobs support scheme – which will replace furlough – will see the government “directly support” the wages of people in “viable” jobs working at least a third of their normal hours.
- The government will top up a third of the worker’s salary that would have otherwise been lost as a result of working reduced hours – capped at £697.92 a month – which means a third will go unpaid.
- It will start in November and run for six months – with all small and medium-sized businesses eligible for the scheme.
- Larger firms will have to prove their profits have been affected by the COVID-19 pandemic in order to utilise it.
- Businesses will not be able to issue redundancy notices to employees while taking part in this scheme.
- The self-employed grant will be extended on similar terms as this new support scheme.
- A “pay as you grow” scheme to allow companies more time to repay bounce back loans over a period of up to 10 years rather than six.
- Those struggling to pay them back will now be able to choose to make interest-only repayments and “anyone in real trouble” can suspend repayments altogether for up to six months.
- VAT will remain at 5% for hospitality and tourism until 31 March 2021 – rather than reverting back to 20% in January.
- The deadline for taking out a coronavirus business interruption loan will be extended until 30 November, with the government guarantee on them extended for up to 10 years.
Comment from Institute of Fiscal Studies (IFS)
“The new job support scheme represents a significant new intervention from government to support jobs through the crisis. But it is significantly less generous than the furlough scheme it replaces. With employers now having to pay at least 55% of the normal wages of their employees it is clear that many jobs will be lost over the coming months.”
Contact for more information
Roger GUNNING FCMA CGMA