Matt Haycox Daily Logo

Chancellor outlines Winter Economy Plan

As the country looks towards winter, Chancellor Rishi Sunak has today outlined government’s plan to protect jobs and support businesses over the coming months with a new Job Support Scheme and an extension of the Self Employment Income Support Scheme.

“The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery,” the Chancellor said in parliament on Wednesday.

SUNAK… the primary goal of our economic policy remains unchanged

“Our approach to the next phase of support must be different to that which came before,” he said.

It is expected that more than one million businesses will get greater flexibility to help pay back loans.

The Chancellor said the additional government support would provide certainty to businesses and workers impacted by coronavirus across the UK.

The new Jobs Support Scheme is designed to protect millions of returning workers, while extending the Self Employment Income Support Scheme and providing a 15 percent cut in VAT for the hospitality and tourism sectors, and helping businesses in repaying government-backed loans.

“The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve,” Sunak said.

His announcement comes after Prime Minster Boris Johnson set out further measures to combat the spread of the virus over the winter, while preserving the ability to grow the economy.

Prime Minister Boris Johnson

According to a news release from the Treasury “Ministers have introduced one of the most generous and comprehensive economic plans anywhere in the world with over £190 billion of support for people, businesses and public services — including paying the wages of nearly 12 million people, supporting over a million businesses through grants, loans and rates cuts and announcing the Plan for Jobs in July.”

The package of measures for the months ahead applies to all regions and nations of the UK. It includes:

SUPPORT FOR WORKERS

The new Job Support Scheme will be introduced from 1 November to protect viable jobs in businesses who are facing lower demand over the winter months due to coronavirus.

Under the scheme, which will run for six months and help keep employees attached to the workforce, 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 the hours not worked, the government and the employer will each pay one third of their equivalent salary.

A winter to remember?

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 percent 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 percent 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 is also 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 percent 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 government support continues through to next year.

TAX CUTS AND DEFERRALS

Government will extend the temporary 15 percent VAT cut for the tourism and hospitality sectors to the end of March next year. This will give businesses in the sector — which has been severely impacted by the pandemic — confidence to maintain staff as they adapt to a new trading environment.

It could be a long road ahead

In addition, 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.

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.

MORE FLEXIBILITY FOR BUSINESSES TO REPAY LOANS

The burden will be lifted on more than a million businesses who took out a Bounce Back Loan through a new Pay as You Grow flexible repayment system. This will provide flexibility for firms repaying a Bounce Back Loan.

This includes extending the length of the loan from six years to 10, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses. These measures will further protect jobs by helping businesses recover from the pandemic.

Government says it also intends to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to 10 years if it will help businesses to repay the loan.

The Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes that are helping over a million businesses until the end of November. This means more businesses can now benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund. The change aligns all the end dates of the schemes, ensuring that there is further support in place for those firms who need it.

INVESTMENT IN PUBLIC SERVICES

The Treasury has approved £68.7 billion of additional funding for the NHS, including £24.3 billion since the Summer Economic Update in July.

The funding will help ensure the procurement of PPE for frontline staff, provide free school meals for children while at home and protect the country’s most vulnerable.

Share this post

Share on facebook
Share on twitter
Share on linkedin
Share on print
Share on email

Deal or no deal?

UK prepares for Australia-style trade deal with the EU As the UK settles into the reality of greater coronavirus restrictions,

Read More »