The Chancellor, Rishi Sunak, has announced a further package of measures to support employment as the original ‘Furlough’ scheme starts to be phased-out. This comes against a background of a resurgence in cases of Covid-19 across the UK and a reversal of the easing of the lockdown restrictions.
Dubbed the ‘Winter Economy Plan’, the centrepiece of the package is a new Jobs Support Scheme (JSS) to top-up the wages of those who are working reduced hours. Unlike the previous Furlough scheme, the idea is to focus on viable jobs, but where demand may have temporarily dropped, rather than supporting all pre-Covid jobs. The scheme starts on the 1st November (when Furlough ends) and precise rules are still being worked on. In broad terms, employees must work at least a third of their normal hours, which employers will pay for at the usual rates. For any reduced hours, the cost of these will be split three ways between the employee, the employer and the Government. Effectively the employee gets paid two-thirds of their salary for the hours they are not working. There is a cap of £697.92 per month.
The JSS is designed to run for 6 months, and can be claimed along with the previously announced Jobs Retention Bonus. The new scheme is open to all employers, even those that have not used the Furlough scheme in the past. Large businesses will have to undergo a financial assessment to ensure they have been affected by the downturn.
Other elements of the package include;
- extending the Self Employed Income Support Scheme (SIESS). This will see a lump-sum grant paid for the period from Nov through to the end of January to those eligible for the current SEISS who are continuing to actively trade but face reduced demand. This is worth 20% of average monthly profits, up to a total of £1,875. There could be a further round, depending on economic circumstances, for the period Feb 2021 to April 2021.
- the temporary VAT cut for tourism and hospitality businesses will be extended to 31st March 2021.
- those businesses that have deferred their VAT payments will not have to pay it in full in a lump sum at the end March 2021 but will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
- self-assessed taxpayers who deferred their Income Tax payments in July 2020 will not need to pay these until January 2022. This delay also applies to payment due in January 2021.
- businesses who have taken out Bounce Back Loans and the Coronavirus Business Interruption Loans (CBILs) will also have more time to pay them back. The terms of the loans can be extended from six years to ten, with payment holidays and interest-only periods on offer.
Full details of the measures can be found at – https://www.gov.uk/government/news/chancellor-outlines-winter-economy-plan
It has also been announced that there will be no Autumn Budget this year. The Government believes that the fiscal situation is so uncertain, that any decisions made could quickly be overtaken by events. The Comprehensive Spending Review (CSR) is still expected to report this autumn. However, its timeframe may be cut from the usual three years to just one year of funding commitments. Whether this affects any of the announcements on future farm support policies, especially in England, is unclear (see previous article).