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Chancellor Rishi Sunak unveils Job Support Scheme to help top up wages once furlough ends




Chancellor Rishi Sunak has announced a new Job Support Scheme, through which the government will help top up the wages of people who are retained to work at least a third of their normal hours.

Unveiling a new package of measures designed to offer support to the UK’s “fragile” economic recovery amid the coronavirus resurgence, the Chancellor also extended the self-employment income support scheme and VAT cut for the hospitality and tourism sectors. And he extended the help for businesses in repaying government-backed loans.

Chancellor of the Exchequer Rishi Sunak leaves No 11 Downing Street for the House of Commons to give MPs details of his Winter Economy Plan (42409826)
Chancellor of the Exchequer Rishi Sunak leaves No 11 Downing Street for the House of Commons to give MPs details of his Winter Economy Plan (42409826)

Speaking in the House of Commons, he acknowledged “we can’t save every business” and “we can’t save every job”.

Instead, the new Job Support Scheme, which will replace the furlough scheme that closes at the end of October, is designed to protect “viable” roles. The six-month scheme will begin on November 1.

Employees must be employed to work at least 33 per cent of their usual hours to be eligible. For the remaining hours not worked, the government and employers will pay a third of wages each - so a total of two-thirds of the remaining hours will be paid. This means that, overall, an employee working 33 per cent of their usual hours will receive at least 77 per cent of their usual pay.

Further details are due to be published but the scheme will primarily help small and medium-sized employers. Larger businesses must prove their turnover has been hit by Covid-19 to be eligible for the Job Support Scheme.

How the Job Support Scheme will work. Picture: UK Treasury (42410582)
How the Job Support Scheme will work. Picture: UK Treasury (42410582)

The Chancellor told the Commons: “There will be restrictions on larger companies, in terms of capital distributions to shareholders while they are in receipt of money for their workers on this scheme.

“And indeed they will not be able to make redundancy notices to those workers who are on this scheme throughout its duration.”

The move is not as generous as the furlough scheme. Employers are now likely to assess whether they can afford to pay more than a third of an individual’s wages if they are only working a third of the time. However, they will still be able to claim the government’s £1,000 job retention bonus if taking up the scheme.

The Office for National Statistics says nearly three million workers are on partial or full furlough leave, accounting for 12 per cent of the UK’s workforce.

He announced that the VAT cut, from 20 per cent to 5 per cent, for hospitality and tourism companies will be extended until March. It had been due to expire on January 12, 2021.

The Self Employment Income Support Scheme will continue. Picture: UK Treasury (42410551)
The Self Employment Income Support Scheme will continue. Picture: UK Treasury (42410551)

The Treasury said the Self-Employment Income Support Scheme extension to April 30 will “support viable traders who are facing reduced demand over the winter months, covering 20 per cent of average monthly trading profits via a government grant”.

And under Pay as Your Grow, the Treasury said more than one million businesses which have borrowed under the Bounce Back Loan Scheme will be offered the choice of more time and greater flexibility for their repayments.

“Lenders have been enabled to offer Coronavirus Business Interruption Loan Scheme borrowers more time to make their repayments where needed,” said the Treasury.

The government has unveiled a Pay as You Grow scheme. Picture: UK Treasury (42410549)
The government has unveiled a Pay as You Grow scheme. Picture: UK Treasury (42410549)

The deadline for all coronavirus loan schemes has been increased until November 30.

This covers 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.

Meanwhile, those who complete a self-assessment tax form every year who have a tax debt of up to £30,000 will be able to set up a payment plan over 12 months to January 2022.

In response to the measures, Anneliese Jane Dodds, the shadow chancellor, said the Job Support Scheme had been announced very late, with furlough ending at the next month.

But Dame Carolyn Fairbairn, CBI director-general, said: “These bold steps from the Treasury will save hundreds of thousands of viable jobs this winter. It is right to target help on jobs with a future, but can only be part-time while demand remains flat. This is how skills and jobs can be preserved to enable a fast recovery.

“Wage support, tax deferrals and help for the self-employed will reduce the scarring effect of unnecessary job losses as the UK tackles the virus. Further business rates relief should remain on the table.

“Employers will apply the same spirit of creativity, seizing every opportunity to retrain and upskill their workers.

“The Chancellor has listened to evidence from business and unions, acting decisively. It is this spirit of agility and collaboration that will help make 2021 a year of growth and renewal.”

Mike Cherry, Federation of Small Businesses national chair, said: “The UK’s small businesses are facing an incredibly difficult winter. Today’s support package is the flipside of the coin to Tuesday’s COVID-19 business restrictions.

“It is a swift and significant intervention, extending emergency SME loans, creating new wage support for small employers and the self-employed, and providing cashflow help on VAT deferrals and new Time To Pay for any tax bills to HMRC.

“We welcome that the Chancellor is ensuring that decisions to protect public health are informed by the need to protect the economy, people’s jobs and prospects for young people in our schools and workplaces.”

The measures come after new restrictions were announced earlier this week by Prime Minister Boris Johnson to counter the rise in Covid-19 infections, including encouraging people to work from home if they can.


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