Chancellor announces new jobs scheme and further support for business
The Chancellor has announced a number of new measures to ease the pressure on small businesses.
Noting that Britain faces a winter of business failures and jobs losses, the Chancellor on Thursday announced a new Jobs Support Scheme, whereby the government will directly support the wages of people in work giving businesses who face depressed demand the option of keeping employees in a job on shorter hours rather than making them redundant.
"The Jobs Support Scheme is built on three principles. First, it will support viable jobs. To make sure of that, employees must work at least a third of their normal hours and be paid for that work, as normal, by their employer. The government, together with employers, will then increase those people’s wages covering two-thirds of the pay they have lost by reducing their working hours. And the employee will keep their job," said the Chancellor.
"Second, we will target support at firms who need it the most. All small and medium-sized businesses are eligible. But larger businesses, only when their turnover has fallen through the crisis.
"Third, it will be open to employers across the United Kingdom, even if they have not previously used the furlough scheme."
The scheme will run for six months starting in November.
Cash flow boost
At the same time, the Chancellor revealed he was extending several schemes to boost cash flow support for businesses and ease the pressure of VAT on those hardest hit.
“First, Bounce Back Loans have given over a million small businesses a £38 billion boost to survive this pandemic. To give those businesses more time and greater flexibility to repay their loans, we are introducing Pay As You Grow,” Rishi Sunak said.
- loans can now be extended from six to ten years – nearly halving the average monthly repayment;
- businesses who are struggling can now choose to make interest-only payments; and
- anyone in real trouble can apply to suspend repayments altogether for up to six months.
Second, the Chancellor also changed the terms of other loan schemes, extending the government guarantee on Coronavirus Business Interruption Loans for up to 10 years, making it easier for lenders to give people more time to repay.
“I am also extending the deadline of all our loan schemes to the end of the year. And we are starting work on a new, successor loan programme, set to begin in January,” said Mr Sunak.
Third, the Chancellor said he is giving businesses more time and flexibility over their deferred tax bills.
“Nearly half a million businesses deferred more than £30 billion of VAT this year. On current plans, those payments fall due in March,” said Mr Sunak.
“Instead, I will allow businesses to spread that VAT bill over 11 smaller repayments, with no interest to pay.”
The final step announced by the Chancellor is expected to support two of the most affected sectors: hospitality and tourism. On current plans, their VAT rates will increase from 5 per cent back to the standard rate of 20 per cent on 13 January. However, that will now be cancelled, and the lower rate will remain in place until 31 March.