Chancellor announces Job Support Scheme extension for local lockdown areas

The Chancellor has announced that the Job Support Scheme will be expanded to support businesses across the UK which are legally forced to close for some period over winter due to local and national coronavirus restrictions.

The Government says it will pay two thirds of employees’ salaries up to a maximum of £2,100 a month to protect jobs over the coming months and that cash grants to businesses in England required to close in local lockdowns will be increased to up to £3,000 per month.

Chancellor of the Exchequer, Rishi Sunak, said: “The expansion of the Job Support Scheme will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time.”

Under the scheme, employers will not be required to contribute towards wages and only asked to cover NICS and pension contributions.

Businesses will only be eligible to claim the grant while they are subject to restrictions and employees must be off work for a minimum of seven consecutive days.

The scheme will begin on 1st November and will be available for six months, with a review point in January. Payments to businesses will be made in arrears, via a HMRC claims service that will be available from early December. Employees of firms that have been legally closed in the period before 1st November are eligible for the furlough scheme.

First reactions to the extended scheme have focused on the lack of detail about how it will work, particularly for larger companies who have branches in different parts of the country.

Nigel Morris, employment tax director at MHA MacIntyre Hudson, says it’s unclear whether companies already excluded from the Job Support Scheme will benefit from the new plan.

He said:“The Chancellor’s new scheme is being billed as an expansion of the Job Support Scheme, not a continuation of the older Job Retention or furlough scheme. This could be a major issue for larger companies as support from the JSS is restricted, for large companies, to those that have seen a fall in turnover during the crisis.

“Today’s announcement could mean a large business, with strong turnover but required by lockdown rules to shut down, can’t take advantage of the Treasury’s offer to pay two-thirds of employees’ wages because it’s barred from the JSS scheme. Despite the fact that the closure will, of course, affect its ability to retain staff.”

He added that it could create an administrative problem for large employers with branches in both local lockdown areas where extended JSS is available and those in places with no local lockdowns.

Ben Willmott, head of public policy at the Chartered Institute for Personnel and Development, said: “[The newly announced scheme] only applies to businesses that are required to close down, and there’ll be lots of firms that won’t be required to close but might see demand collapse as a result of local lockdown restrictions…I think there is a real risk that lots of employers with real legitimate need that are affected by the restrictions imposed as a result of the pandemic will fall in the gap between [the Job Support Scheme and the furlough scheme].”

The cash grants to businesses in England will be linked to rateable values, with up to £3,000 per month payable every two weeks, compared to the up to £1,500 every three weeks which was available previously. The Government also announced funding for Scotland, Wales and Northern Ireland for similar measures if they wish.

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