Winter Economy Plan unveiled by Chancellor
Today, the Chancellor Rishi Sunak unveiled his Winter Economy Plan.
He began by emphasising that he wanted to protect jobs and the economy over winter and to give NHS whatever it needs. Many people were keen to know whether he would extend the Coronavirus Job Retention Scheme (or Furlough Scheme).
While saying the Furlough Scheme was the correct response to the COVID-19 outbreak in March, he added that a different approach was now needed. Instead, from November, the Treasury plans to support employment via a new Job Support Scheme.
Job Support Scheme
The aim of the new Job Support Scheme is to support the wages of people in work. The three key points of the scheme are:
- To support viable jobs. Employees must work at least a third of their normal hours. For the remaining hours, government will pay 1/3 of wages. As an example, an employee working 1/3 of their normal hours will receive 77% of their pay.
- All SMEs are eligible for the scheme. Larger businesses are only eligible if their turnover has fallen.
- The scheme is open to UK employers, regardless of whether or not they have used the Furlough Scheme.
The Job Support Scheme will last for 6 months after being introduced in November.
Help with cash flow
The second major challenge the Chancellor addressed in the Winter Economy Plan was the issue of business cash flow. To help firms with cash flow, he announced four measures. They were:
- Bounce back loans will be covered by a ‘Pay as you grow’ scheme. The loans can now be extended from six to ten years. Businesses can also apply to suspend payments for six months, with no impact on their credit rating.
- An extended government guarantee on Coronavirus Business Interruption Loan Scheme loans.
- More time and flexibility for businesses over deferred tax bills. VAT payments that were due in March can now be spread over 11 smaller payments.
- The lower VAT rate of 5% for the tourism and hospitality sectors will remain until 31 March 2021, before reverting to the normal rate of 20%.
Help for the self employed
The chancellor also announced that the Self-Employment Income Support Scheme will be extended until 30 April 2021, although it will now only cover 20% of average monthly profits. Importantly, any self-assessed income taxpayers can now extend their outstanding tax bill over 12 months from January.
All in all, the Chancellor’s package of measures was more generous than many had predicted. That said, the emphasis has shifted from saving jobs and businesses to supporting viable jobs and businesses. As the Chancellor pointed out in his speech, for many it is still going to be a very tough six months ahead.
About Ben Locker
Ben Locker is a copywriter who specialises in business-to-business marketing, writing about everything from software and accountancy to construction and power tools. He co-founded the Professional Copywriters’ Network, the UK’s association for commercial writers, and is named in Direct Marketing Association research as ‘one of the copywriters who copywriters rate’.