The Chancellor has today announced the Winter Economy Plan in light of the ongoing pandemic challenges being faced.
The Job Retention Scheme (informally known as the furlough scheme) will still definitely be ending on October 31st, but is being replaced by the Job Support Scheme (JSS). The JSS will start on November 1st and last for 6 months. To be eligible employees must work 33% of their normal hours. For the remaining hours not worked, the government and employer will pay 1/3 of the missing wages each. This means that employees working 33% of their hours will receive at least 77% of their pay. The Chancellor is keen to shift more responsibility on the employer and ensure this scheme has a greater focus on keeping "viable" jobs only.
Another key announcement was for the self-employed income support scheme (SEISS). The Chancellor stated that he is extending the scheme for self-employed on “similar terms”, which presumably will cover the same 6 month period as outlined in the JSS, but confirmed details will be announced in due course.
For businesses who have taken out Bounce Back Loans or Coronavirus Business Interruption Loans the repayment period has been extended from 6 years to 10 years, and businesses can choose to take a 6 month period of paying the interest only if they’re struggling for repayments. These loans will not affect the business credit rating and the Chancellor is to announce a new loan scheme for business in January, which will replace these existing schemes.
The overall message from the Chancellor was to ensure the Winter Economy Plan had a significantly more targeted approach to the support given, rather than the blanket approach from before. Earlier in the year the government told businesses to close, but the overall approach has now changed, and any viable jobs that potentially could be saved may benefit from these new options. Examples of this support being more targeted are the JSS only being available to large businesses who can prove they have been adversely affected by Covid-19 (all small and medium businesses can use the scheme), and the delay in VAT increase in the hospitality and tourism sectors until March 31st. Previously the temporary 5% VAT rate was due to increase back to the conventional 20% rate on January 13th.
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