Chancellor Rishi Sunak has unveiled a new jobs protection scheme that will top up the wages of workers over the winter months as a second Covid-19 wave threatens the UK’s economic recovery.
From November 1, for the next six months, the Job Support Scheme will protect viable jobs in businesses facing lower demand over the winter months, as a result of the virus.
On top of that, a Self-Employment Income Support Scheme (SEISS) extension will support viable traders who are facing reduced demand over the winter months, covering 20 per cent of average monthly trading profits via a government grant.
Under the Job Support Scheme, the government will contribute towards the wages of employees who are working fewer than normal hours, due to decreased demand.
Employers will continue to pay the wages of staff for the hours they work – but for regular 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 reduced hours will still be paid for two thirds of the hours they can’t work.
In order to support only viable jobs, employees must be working at least 33 per cent of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
The Job Support Scheme will be open to businesses across the UK even if they have not previously used the furlough scheme, with further guidance being published in due course.
It is designed to sit alongside the Jobs Retention Bonus and could be worth more than 60 per cent 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, the government has announced.
In addition, it is continuing its support for millions of self-employed individuals by extending the SEISS grant.
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 per cent 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.
The Chancellor also announced that, in order to continue supporting more than 150,000 businesses and protect 2.4 million jobs, the government has extended the 15 per cent VAT cut for the tourism and hospitality sectors to the end of March next year.
Furthermore, up to half a million business who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments.
Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
On top of this, around 11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
The Chancellor revealed that more than one million businesses which have borrowed under the Bounce Back Loan Scheme will be offered the choice of more time and greater flexibility for their repayments.
Lenders have been enabled to offer Coronavirus Business Interruption Loan Scheme borrowers more time to make their repayments where needed.
The application deadline for all coronavirus loan schemes – including the future fund – has been extended to November 30 in a move aimed at ensuring that more businesses can benefit from government-backed support.
Announcing the moves in Parliament the Chancellor said Britain could no longer go on putting its life on hold. He said it had to learn to live with coronavirus and “live without fear”.