By Chancellor announces new Jobs Support Scheme
An emergency scheme that could save hundreds of thousands of jobs this winter has been unveiled by the Chancellor this afternoon.
The government and firms will top up workers’ wages covering up to two-thirds of their hours for the next six months, Rishi Sunak announced to MPs.
He said the Jobs Support Scheme will replace the furlough scheme when it ends on October 31.
There are thought to be around three million people still furloughed (the ONS said this morning that 12% of workers were using the scheme, either part or full-time)
The chancellor set out his “winter economy plan” after the government introduced new measures to stop the spread of the coronavirus.
Having warned that he cannot save every business or every job threatened by the pandemic, he outlined a four-point plan to help the economy through a tough winter, with the first of these the new wage subsidy scheme to encourage struggling firms to keep people on short-term contracts, rather than making them redundant.
Employees must work at least third of their hours and be paid for them, then they’ll be paid two-thirds of their pay for the remaining hours (with the employer and the government paying one-third each). So people will still see lower take-home pay – with the Treasury saying someone who works 33% of their hours would get 77% of their wages.
Businesses that have borrowed money through the government’s loan scheme will also be given more time to repay the money.
There will also be more help for the hospitality sector by extending the cut in the VAT rate to 5% until March 31 next year.
And deferred VAT bills, with the chancellor letting businesses spread out their VAT bill over eleven smaller payments, should avoid a cash crunch in March.
The existing grant for self-employed people is being extended on similar terms to the Jobs Support Scheme
Mr Sunak was forced to act amid widespread warnings that fresh curbs on business activity this week to combat the disease, that could last for six months, would spark waves of redundancies as the current Job Retention Scheme is wound down.
That has already cost the taxpayer almost £40 billion to date while Treasury-backed business loans of £57 billion have been handed out.
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