Chancellor boosts financial aid package

The Chancellor has announced extra financial support for businesses and the self employed who have been hit by Covid.

Rishi Sunak said he would be increasing support through the existing Job Support and self-employed schemes, and expanding business grants to support companies in high-alert level areas.

The Job Support Scheme comes in on 1st November, replacing the furlough scheme. Originally it was aimed at supporting short time working. As first envisaged, employers would reduce their hours to 33% of their normal hours, but the employer and government would each to pay a third of the hours not worked.

According to the new announcement, employers can reduce hours to just 20% of normal hours and employer contributions to the unworked hours will be reduced to 5%, with the government footing the rest of the bill. The Government says that means that if someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer only £44.

Sunak also expanded business grants to cover businesses in particularly affected sectors in high-alert level areas and doubled grants under the extended Self Employment Income Support Scheme to cover 40% of previous earnings between November and January. The maximum SEISS grant will increase from £1,875 to £3,750 and there will be a new grant from February.

Employers will continue to receive the £1,000 Job Retention Bonus for retaining furloughed workers – who earn at least £520 a month on average – until the end of January and the extended scheme for business who legally have to close due to Covid-19 restrictions remains at 67% of earnings up to a maximum of £2,100 a month.

The Chancellor has also announced cash grants of up to £2,100 per month primarily for businesses in the hospitality, accommodation and leisure sector who may be adversely impacted by the restrictions in tier 3 areas who aren’t legally required to close. These grants will be available retrospectively for areas who have already been subject to restrictions.

Rishi Sunak said: “I’ve always said that we must be ready to adapt our financial support as the situation evolves, and that is what we are doing today. These changes mean that our support will reach many more people and protect many more jobs.

“I know that the introduction of further restrictions has left many people worried for themselves, their families and communities. I hope the government’s stepped-up support can be part of the country pulling together in the coming months.”

Tony Wilson, Director of the Institute for Employment Studies, commented on the announcement, saying: “The changes to the Job Support Scheme are welcome news for workers and firms.  By all-but removing the employer contribution, the benefits for firms in using this scheme rather than laying people off are far stronger and mean that we now have a workable scheme to support short-time working through the winter.

“However, for the most disrupted sectors under the tightest Tier 2 and Tier 3 restrictions, the changes announced today may still not go far enough.  We estimate that at least half a million jobs were furloughed in hospitality and the arts in Tier 2 and 3 areas, and many of these employers may well struggle to bring workers back for the minimum one day a week required under the scheme.  If they can’t do so, or can’t afford to pay them for that time, then they may still have no choice but to lay workers off.  So we would urge the government to use its discretion to waive the hours requirement in the most disrupted sectors in higher-alert areas.”

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