Coronavirus: Chancellor Rishi Sunak announces the new Job Support Scheme!
The focus of the Government in their announcement of the new Job Support Scheme by Rishi Sunak today is to keep employees in their jobs and to avoid redundancies.
It's been six months since the Coronavirus lockdown and we have had the Coronavirus Job Retention Scheme (CJRS) to keep many businesses from making redundancies and feeling the devastating full effects of a downturn in business. Many have relied upon the CJRS for business stability and today is the eagerly-awaited announcement by Rishi Sunak about the replacement for the CJRS - the new Job Support Scheme. What will it be? and How will it be different?
The Job Support Scheme will take effect from 1 November, after the Coronavirus Job Retention Scheme (furlough scheme) ends on 31 October 2020.
The new scheme provides financial support to employers for a period of six months from 1st November 2020.
"The government will directly support the wages of people in work, giving businesses who face depressed demand the option of keeping employees in a job on shorter hours, rather than making them redundant," Mr Sunak said.
The government's contribution to workers' pay will fall sharply compared with the furlough scheme.
Under furlough, the government initially paid 80% of a monthly wage up to £2,500 - under the new scheme this will drop to 22%.
Businesses are also entitled to claim the Job Retention Bonus, where the government pays £1,000 for every furloughed employee who comes back to work until at least the end of January.
The Government's new Job Support Scheme has 3 clear aims:
1. to support viable jobs - the government will subsidise the pay of employees who are working fewer than normal hours due to lower demand. It will apply to staff who can work at least a third of their usual hours. Employers will pay staff for the hours they do work. For the hours employees can't work, the government and the employer will each cover one third of the lost pay. The support grant is capped at £697.92 per month, per employee.
2. to target businesses that need it the most - all small to medium-sized businesses are eligible to apply for support through the new Job Support Scheme. Larger employers are only eligle for support where they can prove that their turnover has fallen during the Coronavirus crisis.
3. it is open to employers across the UK - even if they have not previously used the Coronavirus Job Retention Scheme (CJRS), known as the furlough scheme.
Quick Summary of Rishi Sunak's announcement:
New Job Support Scheme, starting in November replaces the 'furlough scheme' and means the government will pay part of workers' wages who have lost hours
The worker must do at least one-third of normal hours, and the government and employer will pay one-third each of the lost hours
The cut in VAT to 5% for the hospitality and tourism sector will be extended until 31 March
Firms that took government loans during the crisis will have longer to pay them back
And companies that deferred their VAT bill will no longer have to pay a lump sum in March.