Chancellor Rishi Sunak today laid out his plans for protecting jobs and the economy as we head into the winter period with Covid-19 cases on the rise and the furlough scheme due to finish at the end of October.
With a recent tightening of restrictions due to an increasing infection rate in a number of areas around the country, and with many businesses and employees still relying on the furlough scheme, the measures seek to protect jobs and provide certainty and clarity for the small business community as stricter Covid-19 restrictions come into force.
After warnings from the TUC (Trades Union Congress) and the CBI (Confederation of British Industry) that ending the furlough scheme without an adequate replacement would cause the failure of thousands of businesses and a sharp increase in unemployment, the Government has unveiled a new Wage Subsidy Scheme built to protect jobs, with the Government paying the wages of employees on short-time working hours.
It comes as part of a broad package of support laid out by The Treasury to underpin the Government’s strategy to tackle the rise in infections heading into the winter period. Here’s what was announced:
Jobs Support Scheme
Following hot on the heels of European neighbours Germany, Ireland and France, the Chancellor has unveiled a new Jobs Support Scheme, designed to replace the Jobs Retention Scheme (commonly referred to as the furlough scheme). The Government will work with employers to keep workers in viable jobs by subsidising the wages of employees working at least a third of their normal hours.
The Chancellor also announced a new "pay as you grow" scheme for businesses that have taken the government-backed Bounce Back loans. These loans can now be extended form six years to ten years, which can effectively halve the average monthly repayment without any impact on the credit rating of the borrower.
Extension to Government Business Loan Scheme
The Chancellor has announced an extension to the widely-popular Coronavirus Business Interruption Loan Scheme (CBILS), along with other Government-backed loan facilities, giving businesses more time to apply and lenders more time to process applications for funding. Businesses will now have until 30 November 2020 to apply.
VAT Cut for Hospitality & Tourism
The Chancellor has also extended the 15% VAT cut for the hospitality and tourism sectors to the end of March next year.
For an in-depth guide to finding support for your business during the Covid-19 pandemic, check out our Covid-19 Business Support Guide.