The Chancellor’s Winter Economic Plan

jobs support scheme

Opening Remarks

  • Rishi Sunak said the UK is in a fundamentally different position to what it was in March when the coronavirus first spread
  • He gave a summary of the furlough scheme so far:
    • It has cost the UK £39.3bn so far
    • 9.6 million jobs have been furloughed
  • He says  the “economy is now likely to undergo a more permanent economic adjustment”

Furlough Scheme Replacement

  • A new “jobs support scheme” has been announced to subside the wages of people in work to replace the furlough scheme when it ends next month.
  • Businesses will have the option of keeping employees in a job on shorter hours, rather than making them redundant.
  • Workers must work a third of their usual hours, paid by their employer as normal.
  • For the time they are not working, the government will pay a third of their usual pay, and the employer will pay a third of their usual pay.
  • Including the pay for the hours they are working, the Treasury says this means workers will get 77% of their usual pay.
  • The scheme will be targeted at businesses that need it most – all small and medium-sized firms – but only for big companies if turnover has fallen by a third.
  • The scheme will run for six months starting in November.
  • Firms can claim both the jobs support scheme and the jobs retention bonus.
  • A grant for self-employed workers will be extended on similar terms.

Business Loans

  • Sunak announces “pay as you grow” to help companies repay state-backed business loans.
  • Loans can be extended from six to 10 years, almost halving repayments. Interest-only payments can be made, and firms in “real trouble” can suspend their payouts.
  • All of the government’s state-backed loan schemes will be extended until the end of 2020, and the government is starting work on a new guarantee loan programme to begin in January.
  • The chancellor will allow businesses more time and flexibility over deferred tax bills by allowing them to spread their VAT bills over 11 separate payments.

Hospitality Sector

  • Rishi Sunak said the current plans for the hospitality and tourism sectors were to increase VAT to 20% on 13 January 2021
  • This plan has now been scrapped
  • The new plan is to keep the current rate of 5% until 31 March 2021

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