The Chancellor has unveiled a new emergency job saving scheme, confirming that the current furlough scheme will come to an end this October.
Rishi Sunak said that the primary economic goal of the incumbent government was to save jobs, but that the way this is achieved must "evolve.” He said that it would be “fundamentally wrong” to keep people in jobs that only exist inside the furlough scheme, adding that the new scheme’s aim was to save “viable” jobs.
The new scheme will see the government top up the wages of people working at least a third of their normal hours.
The Chancellor also confirmed that a cut to VAT for hospitality businesses will stay in place until at least 31 March 2021.
How does the new jobs scheme work and who is eligible?
The aim of the new scheme is to keep workers in jobs within industries which will see a decline in operations during the winter months, while also encouraging the return of furloughed staff.
Mr Sunak explained, “The scheme will support viable jobs so employees must be working at least a third of their normal hours and be paid for that work, as normal, by their employer.”
Employers are expected to cover the hours that their employees do work. On top of that, the government will split the cost with employers to cover two thirds of the hours they have lost by reducing their working hours, up to a cap of 77 per cent of their original wage.
For example if an employee works 33 per cent of their usual work pattern, the government and employer would pay an additional 22 per cent each of the employees usual wage.
The scheme will be in place from 1 November 2020 to April 2021.
Who is eligible for the job support scheme?
All small and medium sized businesses are eligible to apply for the scheme, even those who didn’t utilise the government’s original furlough scheme.
Larger businesses will also be able to apply but “only when their turnover has fallen.”
The scheme will apply to anyone who has been employed from 23 September.
What other measures were announced?
The Chancellor also confirmed that he is extending the self-employment grant under “similar terms and conditions as the new Jobs Support Scheme.”
Mr Sunak announced a “pay as you grow” scheme that would give firms who took out bounce back loans more time to repay.
He told the Commons, “This means loans can now be extended from six to 10 years, nearly halving the average monthly repayment.”
The temporary reduction of VAT rates for the hospitality sector from 20 per cent to five per cent will remain in place until 31 March 2021, the Chancellor confirmed.
Mr Sunak also said more than 60,000 small and medium-sized businesses have taken out coronavirus business interruption loans, adding that the Government guarantee on these loans would be extended for up to 10 years.
He said he will extend the deadline of all the Government’s loan schemes until the end of the year, adding, “We are starting work on a new successor loan guarantee programme, set to begin in January.”