Chancellor unveils new Job Support Scheme to replace furlough scheme

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Chancellor unveils new Job Support Scheme to replace furlough scheme
The new Job Support Scheme will also be targeted at small and medium-sized firms, with larger companies only eligible if they can prove their turnover has fallen due to the crisis. (Image: Aaron Chown/PA Wire)
// Chancellor Rishi Sunak unveils new Jobs Support Scheme aimed at protecting “viable” roles in second wave
// The scheme will replace the furlough scheme, which winds up at the end of October
// New scheme will cost the Treasury an estimated £300m a month for every million workers

Chancellor Rishi Sunak has confirmed a new Jobs Support Scheme aimed at protecting “viable” roles as the UK heads into a second wave of soaring daily cases of Covid-19.

The new scheme’s targeted approach replaces the furlough programme, officially known as the coronavirus Jobs Retention Scheme, that announced at the start of lockdown and comes to an end at the end of next month.

Under the terms of the new scheme announced today, the UK Government will top up the wages of people working at least a third of their normal hours due to the pandemic.


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They will be paid for that work as normal, with the state and employers then increasing those wages to cover two-thirds of the pay they have lost by working reduced hours.

It will cost the Treasury an estimated £300 million a month for every million workers who take up the scheme.

The new Job Support Scheme will also be targeted at small and medium-sized firms, with larger companies only eligible if they can prove their turnover has fallen due to the crisis.

Sunak also extended the self-employment income support scheme and 15 per cent VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.

The Chancellor delivered his plans in the House of Commons today, cancelling his Budget in doing so.

“The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery,” Sunak told MPs.

He also conceded that “we can’t save every business” and “we can’t save every job”.

Sunak warned that the economy may be permanently changed as a result of the pandemic.

He acknowledged that people were “anxious, afraid and exhausted” at the prospect of further restrictions but insisted there were reasons to be “cautiously optimistic” about the country’s ability to cope.

However, he said that while in March it was hoped there would be a “temporary period of disruption” to the economy, it now appeared there would be a “more permanent adjustment”.

“The sources of our economic growth and the kinds of jobs we create will have to adapt to the new normal,” he said.

The new measures announced by the Chancellor include:

  • The new Job Support Scheme, which will be targeted at small and medium-sized firms, with larger companies only eligible if turnover has fallen due to the crisis.
  • The existing self-employed grant will be extended on similar terms and conditions as the new job support scheme.
  • The temporary 15 per cent VAT cut for tourism and hospitality will be extended until the end of March.
  • A new payment scheme will give more breathing space for more than £30 billion of deferred VAT payments, allowing them to make 11 interest-free payments in 2021-22 rather than a lump sum at the end of March.
  • A “pay as you grow” measure will extend the repayment terms for bounceback loans from six to 10 years.
  • Firms which have taken out coronavirus business interruption loans will see the government guarantee extended for up to 10 years.
  • All loan schemes will be extended until the end of the year.

Sunak told MPs: “Today’s measures mark an important evolution in our approach, our lives can no longer be put on hold.”

Shadow chancellor Anneliese Dodds said: “We must ensure these measures are as effective as possible at keeping workers in employment, getting unemployed people back into work and keeping viable businesses in operation.”

CBI director-general Dame Carolyn Fairbairn welcomed the “bold steps” from the Treasury.

“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,” she said.

However, she added: “Further business rates relief should remain on the table.”

Robert Hayton, head of property tax at the real estate adviser Altus Group, agreed.

He said the new measures was a missed opportunity to deliver “discerning targeted support” to help with business rates bills from next April.

“358,264 retail, leisure and hospitality premises will be returned to full business rates during 2021/22 after having had a £10.13 billion rates holiday in England this financial year. This could create a cliff edge,” he said.

Like the CBI, the BRC welcomed the Chancellor’s Job Support Scheme – saying it would help reduce job losses for eligible companies – while also highlighting the omission of further business rates support.

“The VAT reduction for cafes and food-to-go will be welcomed as many continue to suffer as a result of low footfall and the government’s ‘work from home if possible’ guidance,” BRC business and regulation director Tom Ironside said.

“We look forward to seeing the details of the additional flexibilities on loans and tax deferrals that have been announced.

“Retail is on a delicate path to recovery, but the looming threat to this remains the £8 billion business rates cliff-edge from April 2021.

“Retailers need certainty and the Chancellor must take action and bring down the business rates burden in order to avoid unnecessary job losses and shop closures.”

However, unions have accused the Chancellor of using a plaster to cover a “gaping wound” while jobs have already been lost.

Mark Serwotka, general secretary of the Public and Commercial Services union, said the furlough scheme should have been extended beyond next month.

He claimed the Conservatives have put “ideological opposition” to state intervention over saving jobs.

“Any support for jobs and key industries during this unprecedented global pandemic is to be welcomed,” he said.

“However, the Chancellor’s measures are akin to using a plaster to cover a gaping wound.

“Our members in the commercial sector, aviation and culture are already being threatened with hundreds of redundancies, as employers seek to capitalise on the economic fallout from Covid-19.

“The Tories’ ideological opposition to increased state intervention is hurting the economy and costing people their livelihoods right now.”

TUC general secretary Frances O’Grady said: “Unions have been pushing hard for continued jobs support for working people.

“We are pleased the Chancellor has listened and done the right thing.

“This scheme will provide a lifeline for many firms with a viable future beyond the pandemic.

“But there’s still unfinished business. Unworked hours under the scheme must not be wasted.

“Ministers must work with business and unions to offer high-quality retraining, so workers are prepared for the future economy.”

Paddy Lillis, general secretary of the shopworkers union Usdaw, said: “We are pleased that the Chancellor has eventually stepped back from the cliff-edge ending of the jobs retention scheme and we will study the details of the new jobs support scheme.

“However we are very disappointed that he made no mention of the deep difficulties the retail industry faces.”

John Phillips, acting general secretary of the GMB, said: “Whether this is enough to stave off widespread redundancies depends very much on the detail, and it will be judged not just on jobs but on people’s living standards and ability to pay the bills.”

with PA Wires

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