WITH the furlough scheme set to end next month, chancellor Rishi Sunak today set out his plans to protect jobs and limit the damage on the UK economy caused by the coronavirus.
Mr Sunak said, "The primary goal of our economic policy remains unchanged: to support people’s jobs. The way we achieve that must evolve. Back in March, we hoped we were facing a temporary period of disruption. It is now clear, as the prime minister and our scientific advisers have said for at least the next six months the virus and restrictions are going to be a fact of our lives."
Mr Sunak announced a new set of measures designed to support businesses. The Job Support Scheme is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to COVID-19, to help keep their employees attached to the workforce. The scheme will open on 1 November 2020 and run for six months.
The company will continue to pay its employees for the time worked, but the cost of hours not worked will be split between the employer, the government (through wage support) and the employee (through a wage reduction), and the employees will keep their jobs. The government will pay a third of hours not worked up to a cap, with the employer also contributing a third. The government contribution will be capped at £697.92 a month. This will ensure employees earn a minimum of 77 per cent of their normal wages, where the government contribution has not been capped. Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
Full details of the plan can be seen here (click). But here's a list of highlights:
- All small and medium-sized businesses are eligible for the scheme
- Bigger business will be eligible if their turnover has fallen during the pandemic
- The government will subsidise the pay of employees working fewer than normal hours because of lower demand
- Workers must work at least one-third of their normal hours, paid for by their employers
- The government and the employer will pay one-third each for the hours workers can't work so someone working a third of their hours would receive 77 per cent of their pay
- The grant will be capped at £697.92 per month
- It will be open to employers across the UK, even if they have not used the furlough scheme
- The scheme will run for six months starting on 1 November
John Pearce (left), CEO of Made in Britain, said, "Recognising the enormous number of high-quality, viable jobs in manufacturing sectors, the chancellor's plans to support employment appear to be the right kind of measures to help businesses making essential products in Britain, safely through to 2021.
"More than 45,000 people are working for Made in Britain members, many of them SME businesses looking to grow their way out of the current downturn caused by COVID-19. I hope these measures will safeguard their futures."
Dame Carolyn Fairbairn, director-general of the Confederation of British Industry, said, “Wage support, tax deferrals and help for the self-employed will reduce the scarring effect of unnecessary job losses as the UK tackles the virus. Further business rates relief should remain on the table. Employers will apply the same spirit of creativity, seizing every opportunity to retrain and upskill their workers."