Chancellor outlines winter economy plan in response to latest coronavirus developments.

Chancellor outlines winter economy plan in response to latest coronavirus developments.

Chancellor Rishi Sunak today outlined additional government support to provide certainty to businesses and workers impacted by coronavirus across the UK.

The package of measures is aimed at continuing to protect jobs and help businesses through the uncertain months ahead, as the UK continues to tackle the spread of COVID-19. It includes a new Jobs Support Scheme to protect millions of returning workers, extending the Self Employment Income Support Scheme, a 15% VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.

The announcement comes after the Prime Minster set out further measures to combat the spread of the virus over the winter, while preserving the ability to grow the economy.

Mr 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."

The package of measures, which applies to all regions and nations of the UK, includes:

Support for workers

A new Job Support Scheme will be introduced from 1 November to protect viable jobs in businesses who are facing lower demand over the winter months due to coronavirus.

Under the scheme, which will run for six months and help keep employees attached to the workforce, the government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand.

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 each pay one third of their equivalent salary.

In order to support only viable jobs, 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.

In addition, the Government is continuing its support for millions of self-employed individuals by extending the Self Employment Income Support Scheme Grant (SEISS).

An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.

Tax cuts and deferrals

As part of the package, the government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year. This will give businesses in the sector - which has been severely impacted by the pandemic - the confidence to maintain staff as they adapt to a new trading environment.

In addition, up to half a million business 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 March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.

Giving businesses flexibility to pay back loans

The burden will be lifted on more than a million businesses who took out a Bounce Back Loan through a new Pay as You Grow flexible repayment system. This will provide flexibility for firms repaying a Bounce Back Loan.

This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses. These measures will further protect jobs by helping businesses recover from the pandemic.

In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes that are helping over a million businesses until the end of November.

Investment in public services

At the start of the pandemic, the Chancellor pledged to give the NHS and public services the support needed to respond to coronavirus – and as of today, £68.7bn of additional funding has been approved by the Treasury, including £24.3bn since the Summer Economic Update in July.

As announced earlier this year, the Treasury has also guaranteed the devolved administrations will receive at least £12.7bn in additional funding. This gives Scotland, Wales and Northern Ireland the budget certainty to for coronavirus response in the months ahead.

Responding to the announcement, Chris Hobson, Director of Policy at East Midlands Chamber, said: "Following the Prime Minister’s update earlier this week in which he put businesses on notice that they could be facing another six months of restrictions, the additional measures announced by the Chancellor today will give many businesses some important breathing space.

“It’s crucial that employers are given the help to retain jobs that would otherwise be viable in normal times. The introduction of the Job Support Scheme from 1 November means those businesses that had been looking anxiously towards 31 October and the end of the furlough scheme can now plan ahead with a bit more certainty.

“The flexibility afforded to businesses via the ‘pay as you grow’ payback scheme on bounce back loans, the ability for deferred VAT to be repaid in 11 instalments rather than one lump sum, and the extended Government guarantee for the Business Interruption Loan Scheme all give breathing space to organisations that otherwise would have been staring down the barrel in six months’ time.

“Finally, the hospitality and tourism sectors have been among the worst hit by the pandemic, so extending the 5% VAT rate to the end of March provides some much-needed support to keep businesses open.

“While this is one of the more encouraging days for business in recent times, the Chancellor must remain open to taking additional action to supporting those parts of the economy facing unprecedented challenges over the months ahead.

“This isn’t the end of Covid-19 and this won’t be the end of the support measures needed, so the Government must work closely with businesses locally and nationally to understand how it can best support them to get through this.”

 

COVID-19 Business Support Hub

These are challenging times for business and although our ethos is to only shout about good news, we've created COVID-19 Business Support Hub on the Love Business the website to support you with expert tips, advice and ideas from your fellow businesses to help you get through this COVID-19 crisis. 
 

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