Chancellor outlines Winter Economy Plan

24 September saw the Chancellor, Rishi Sunak, announced a package of measures aimed at continued protection of jobs and to help businesses through the uncertain months ahead as North Somerset and the nation continues to tackle the pandemic and the resurgence of COVID-19.

Described by Rishi Sunak as a “radical intervention into the UK labour market”, the Jobs Support Scheme will allow full-time workers to go back to work part-time and have the government help pay for two-thirds of hours they have lost.

The scheme will operate from 1st November for the next 6 months. It is designed to protect viable jobs in businesses who are facing lower demand due to the pandemic. To be eligible employees must work a minimum of 33 percent (1/3rd) of their hours. 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 pay one third of their equivalent salary. 

It is primarily aimed at small and medium sized enterprises although all employers will be allowed to apply for JSS even if they did not use the furlough scheme. Larger employers will only be covered if their turnover has gone down.

Self-employed workers will also be able to claim on similar terms from November too. The Self Employment Income Support Scheme extension will support viable traders who are facing reduced demand over the winter months, covering 20 percent of average monthly trading profits via a government grant.

“The government will directly support the wages of people in work, giving businesses that face depressed demand the option of keeping employees in a job on shorter hours rather than making them redundant,” Sunak said.

“We will target support at firms that need it most – all SMES are eligible, but larger businesses are only eligible when their turnover has fallen during the crisis.”

Elsewhere, businesses who have borrowed under the Bounce Back Loan Scheme – which sees the government take on 100 per cent of default risk – has also evolved to allow businesses to make interest-only repayments or suspend repayments entirely for six months.

The Winter Economy Plan enables lenders to offer Coronavirus Business Interruption Loan Schemes borrowers more time to make their repayments where needed. The application for all Coronavirus loan schemes has extended to 30th November, 2020.

The Treasury is allowing businesses who deferred their VAT will no longer have to pay a lump sum at the end of March 2021. They can instead split it into smaller interest free payments over the course of 11 months.

Government have also extended the 15% VAT cut for the tourism and hospitality sectors to the end of March 2021.

Further reading:

News story: https://www.gov.uk/government/news/chancellor-outlines-winter-economy-plan_  

Full Winter Economy Plan document: https://www.gov.uk/government/publications/winter-economy-plan