As the government’s furlough scheme draws to a close, Rishi Sunak has today announced a new support package to protect jobs and businesses.
The chancellor laid out the new measures in a statement to parliament today.
It came after he yesterday scraped plans for an autumn budget yesterday to focus on economic difficulties caused by the coronavirus pandemic, saying he would announce the details of a “winter economy plan” that would “continue protecting jobs”.
Here, we take a closer look at the measures the chancellor announced today.
What financial support did Rishi Sunak announce?
Mr Sunak announced a multibillion-pound support package for the economy in an attempt to protect jobs in the winter.
The chancellor said the government would top up wages of workers covering up to two-thirds of their hours for next six months, in order to stop companies making employees redundant. This measure, called the new Jobs Support Scheme, will replace the current furlough scheme when it ends on October 31.
Workers will work at least third of their hours, paid by their employer, and the government will top up the rest of the wages.
The scheme is targeted at small and medium-sized businesses, which need it most – and some larger companies if turnover has decreased by a third.
The scheme will begin in Novermber and run for six months.
A similar grant for self-employed workers will also be extended.
VAT was cut from 20 to 5 percent for the hospitality and tourism industry this year, which was due to last until January. However, the chancellor announced that this reduction will now be extended until the end of March.
Mr Sunak also announced “pay as you grow” – a scheme to help companies to pay back government-backed loans.
The chancellor is also set to announce the extension of four loan schemes for struggling businesses until the end of November.
The loan terms can be increased from six years to ten, which will reduce monthly repayments. Companies can also make interest-only payments.
If they are in “real trouble” firms can suspend their repayments.
The loan schemes will be extended until the end of 2020 – and the government is working on a new guarantee loan programme which will begin in January.
The chancellor also announced that businesses can spread their VAT bills over 11 separate payments.
When does the furlough scheme end?
The furlough scheme will continue until the end of October. The scheme has covered backdated wages since March 1.
Rishi Sunak today said it was “fundamentally wrong” to “hold people in jobs that only exist inside the furlough”.
The chancellor said there was “no harder choice than the decision to end the furlough scheme”.