Chancellor Rishi Sunak has announced another support scheme for UK businesses which will replace the existing furlough scheme.
The winter economy plan will see the Government and employers pay one-third of workers equivalent salary each for the next six months from when the existing furlough scheme finishes at the end of October.
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 this, 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.
Announcing the plans, Sunak said the scheme will support “viable jobs” in businesses who are facing lower demand over the winter months due to coronavirus.
All small and medium sized businesses will be supported as part of the new plan, with larger businesses only supported if their turnover has fallen.
“The decision to introduce the Jobs Support Scheme and to extend the VAT cut for hospitality are welcome from the Government but simply do not go far enough.”
The package will also see the reduction in VAT to 15% for the hospitality and foodservice sector continue.
In addition, up to half a million businesses 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 of March 2020, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
The range of measures announced by Sunak is worth more than £190 billion and will pay the wages of 12 million people. The plans will also support over a million businesses through grants, loans and rates cuts.
Commenting on the new scheme, Sunak said: “The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery. Our approach to the next phase of support must be different to that which came before.
“The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve.”
Reaction
Chief executive of the Food and Drink Federation (FDF), Ian Wright CBE, said: “The decision to introduce the Jobs Support Scheme and to extend the VAT cut for hospitality are welcome from the Government but simply do not go far enough. The requirement for staff to be working part-time to be eligible for support will not be enough to sustain hospitality businesses and their food and drink manufacturing suppliers – the squeezed middle – through a difficult autumn and winter where pubs, bars, and restaurants will have significantly reduced custom.
“The pandemic has had a far greater impact on some sectors of the economy than others – sectors that would continue to support millions of viable jobs once a vaccine is achieved and social distancing can end. Only by continuing a targeted furlough scheme while the current restrictions remain will we avoid mass long-term unemployment and the decimation of a sector that could otherwise support our economic recovery once the pandemic is over. We urge the UK Government to engage with those industries most impacted about what more can be done to support those food and drink businesses most affected by the restrictions.”
