The chancellor of the exchequer Rishi Sunak has unveiled new support measures for UK businesses.
The ‘winter economy plan’ will see the Government and businesses top up workers’ wages covering up to two-thirds of their normal hours for the next six months from November, the chancellor told the House of Commons.
The new Jobs Support Scheme will replace the furlough scheme when it ends on 31 October, after fears of impending mass redundancies.
The chancellor said that employees will have to work for at least a third of their normal hours to quality for the new scheme, which would be paid for by the employer.
“The jobs support scheme is built on three principles,” the chancellor said. “First, it will support viable jobs. To make sure of that employees must work at least a third of their normal hours and be paid for that work as normal by their employer. The Government, together with employers, will then increase those people’s wages covering two-thirds of the pay they have lost by reducing their working hours, and the employee will keep their job.
“Second, we will target support at firms who need it the most. All small and medium-sized businesses are eligible but larger businesses only when their turnover has fallen through the crisis.
“Third, it will be open to employers across the United Kingdom, even if they have not previously used the furlough scheme.
“The scheme will run for six months starting in November and employers retaining furloughed staff on shorter hours can claim both the jobs support scheme and the jobs retention bonus.
Running November to April, all small- and medium-sized businesses across the UK are eligible as well as larger businesses whose turnover has fallen significantly.
In a further measure, businesses which have borrowed money via the Coronavirus Business Interruption Loan Scheme (CBILS) will be given more time to repay the money.
In news most relevant to some corners of the events industry, the chancellor confirmed the VAT cut for hospitality and tourism companies, from 20% to 5%, will be extended until March 2021.
It is not clear how many event businesses are eligible for hospitality and tourism support, but would likely depend on their classification. Chancellor Sunak noted: “To support more than 150,000 businesses and help protect 2.4m jobs through the winter, I’m announcing today that we are cancelling the planned increase and will keep the lower 5% VAT rate until March 31 next year.”
He also confirmed a new “pay as you grow” scheme, which offers businesses which took out a bounce-back loan more time for repayment. Firms can now make interest-only payments and were reassured that their credit rating would not be impacted.
“Loans can now be extended from six to 10 years, nearly halving the average monthly repayment,” he said.
“Businesses which are struggling can now choose to make interest-only payments and anyone in real trouble can apply to suspend repayments all together for up to six months. No business taking up pay as you grow will see their credit rating affected as a result.”
The chancellor signed off his address by saying the country must learn to live with coronavirus, adding: “we must learn to live with it, and live without fear”.
Further practical details will likely be released on 25 September.