Cautious optimism from the Chancellor, who confirmed that while output is below that of February we have seen growth for three consecutive months. Millions of furloughed workers are back in employment.
Rishi Sunak warned that our economy remains fragile in the shadow of a threat of a second wave and so the following plans have been put in place to protect viable jobs.
Primary goal is to protect people’s jobs, £190bn in support has already been provided, but we now move into another 6 months of fragility with a more permanent adjustment to our economy required. The furlough scheme alone has cost the taxpayer £39.3bn so far.
It was confirmed during the announcements that the Furlough scheme will end – it was only ever temporary.
Commenting on the Furlough Scheme, The Chancellor said;
Fundamentally wrong to hold people in jobs that only exist inside the furlough…I cannot save every business, I cannot save every job, no chancellor could
Introduction of Jobs Support Scheme
Businesses are operating safely and viably but face uncertainty and reduced demand – support to protect viable jobs.…
The Government will directly support jobs of those in businesses who have suffered depressed demand
The aim of the Jobs Support Scheme is to keep employees in a job on shorter hours rather than redundancy.
JSS works on 3 principles;
The Chancellor confirms that the Government will directly support viable jobs;
- Employee must work a minimum of a third of normal hours and paid as normal by employer.
- Government will increase wages together with employers to cover two thirds lost by reducing hours an employee will keep their job
- Target support at firms who need it most, all Small and medium sized are eligible but larger businesses will only be eligible when turnover has fallen due to the pandemic.
Open to all employers across the UK, even if they have not yet had to use the CJRS Furlough scheme.
The scheme will be open for 6 months starting November and employers retaining furlough staff can claim both the JSS and the JRS retention bonus.
Self Employed Income Scheme
Chancellor announces that there must be parity between employed and self-employed.
Therefore the Government will be extending the existing SEISS grant on similar terms and conditions as the new JSS – more details to follow.
Helping businesses with cashflow
Protecting jobs is key so further steps to allow that have been announced and are outlined broadly below;
- Bounceback loans over a million businesses £38billion boost – introduction of Pay As You Grow to allow further flexibility and more time to repay loans.
a. Extended from 6 to 10 years, almost halving avg monthly repayment
b. Interest only repayments option available
c. Anyone “really struggling” can apply to defer for up to 6 months.
d. Credit rating will not be affected as a result of extending payment periods or reducing payments. - Business Interruption Loans extended – Gov guarantee extended for up to 10 years.
- Deadline of all loan schemes extended to the end of this year
- Successor loan program set to launch in January 2021
- Deferred tax bills – march vat due can spread vat bill over 11 smaller payments with NO interest to pay
- Self-Assessment taxpayers can extend outstanding tax bill over 12 months from January 2021.
Hospitality and Tourism VAT Rate
Vat rates were due to increase back to 20% on January 13th under current plans – to support the 150,000 businesses across this struggling industry, the Chancellor announced the cancellation of planned increase and will keep the lower 5% vat rate for this industry until 1st March 2021.
It was also confirmed that there will be no Autumn Budget this year.
MJB Avanti will bring you further details on all the measures announced today as and when the Government are able to confirm the finer details.