Last reviewed 29 October 2020
The Government has responded to recent complaints by political leaders in areas being told to move to the highest level of coronavirus restrictions by, in its words, significantly increasing the generosity and reach of its winter support schemes.
Chancellor Rishi Sunak told the House of Commons that he was taking three further steps, recognising that even businesses that can stay open and trade face “profound” economic uncertainty.
The new plan
The Chancellor said:
open businesses which are experiencing considerable difficulty will be given extra help to keep staff on with the Government increasing its contribution to wage costs under the Job Support Scheme, and business contributions falling to 5%
business grants will be expanded to cover those in particularly affected sectors in high-alert level areas
grants for the self-employed will be doubled to 40% of previous earnings.
“I’ve always said that we must be ready to adapt our financial support as the situation evolves, and that is what we are doing today,” Mr Sunak explained. “These changes mean that our support will reach many more people and protect many more jobs.”
The following looks at the three parts of the package in more detail.
Job Support Scheme
When originally announced, the JSS — which will come into effect on 1 November — asked employers to pay a third of their employees’ wages for hours not worked, and required those employees to be working one third of their normal hours.
The employer contribution to those unworked hours will now be reduced to 5%, and the minimum hours requirements cut to 20%, so those working just one day a week will be eligible.
According to the Chancellor, that means that if someone was being paid £587 for their unworked hours, the Government would be contributing £543 and their employer only £44.
The Chancellor has also announced approved additional funding to support cash grants of up to £2100 per month primarily for businesses in the hospitality, accommodation and leisure sector who may be adversely impacted by the restrictions in high-alert level areas.
These grants will be available retrospectively for areas which have already been subject to restrictions, and come on top of higher levels of additional business support for local authorities moving into Tier 3 which, if scaled up across the country, would be worth more than £1 billion, he pointed out.
These grants could benefit around 150,000 businesses in England, including hotels, restaurants, B&Bs and many more who, while not being legally required to close, have been adversely affected by local restrictions.
They will be retrospective, with businesses in any area that has been under enhanced rules able to backdate claims to August.
The amount of profits covered by the two forthcoming self-employed grants will be increased from 20% to 40%, meaning the maximum grant will increase from £1875 to £3750.
This covers the period November to January with a further grant to follow covering February to April.
Comment by Alan Price, CEO of BrightHR
Another day, another important Government announcement about coronavirus.
Since the new Job Support Scheme was announced several weeks ago as the replacement to the outgoing furlough scheme for coronavirus business support, criticism has been levelled at the Government that it did not go far enough.
Now, with just under two weeks to go until the scheme is set to be rolled out across the UK, it seems that the Chancellor has listened to these concerns.
Today’s amendment to the scheme focuses on companies that can remain open despite coronavirus restrictions, such as those in tiers 1 and 2 or those in tier 3 which have not been told to close entirely.
As before, employees will still need to work for a portion of their normal hours, with the Government and their employer funding their wage for some of the time they do not work.
Applying to all businesses across all three tiers, the Chancellor’s announcement now means that companies will need to contribute less to the scheme than expected previously, with the Government instead covering most of the bill from their end.
This will likely come as welcome news for businesses, helping them to keep their wage costs further down as Government support is ramped up.
It does also offer more incentive to employers to keep staff on, with their employer needing to provide them fewer hours in which to work. Again, the Government’s focus does seem to remain on preserving as many jobs as possible during the winter months.
All eyes will now turn to the Government to finally release detailed guidance surrounding the use of the scheme, which will hopefully clarify many of the questions that still need to be answered.
In the meantime, employers should carefully consider if this announcement will provide them with the lifeline they require, or if, even with these changes, the scheme simply will not help them to the degree they need and alternatives, such as redundancies, are necessary.