Chancellor Rishi Sunak has announced a new package of business support measures to boost the economy when the furlough scheme ends in October.
His new job support scheme – launching on 1st November for six months – aims to keep employees in work on shorter hours rather than making them redundant; employees need to work at least one-third of their normal hours and for those hours not worked, the Government and their employer will each pay one-third of their wages, so that they’ll get at least 77% of their pay.
The Treasury has said that the grant will be capped at £697.92 per month.
All small and medium firms will be eligible, even if they haven’t used the furlough scheme, while larger ones can apply, but only if their turnover has fallen due to Covid.
Launching his winter economy plan, Sunak said: “We’re now nurturing recovery of the economy – the rationale must be different to what has come before. It’s fundamentally wrong to hold people in jobs that exist just in furlough – people need to be in viable jobs.”
In his statement in the Commons, he also announced a boost for businesses struggling with cashflow to give them more time and flexibility with bounce back loans under a ‘pay as you grow’ scheme; loans can be extended from six to 10 years, nearly halving the average monthly repayments. Borrowers can make interest-free payments if needed or suspend payments for up to six months.
It covers CBILS (bigger loans) as well as Bounceback (up to £50k) loans and also the deadline to apply on both schemes is extended to the end of the year.
Sunak cut businesses some slack with their VAT tax bills too, allowing them to spread payments over 11 smaller payments with no interest to pay, while those filing self-employed income tax assessments can now extend their bill over 12 months from next January.
He also cancelled the planned increase in VAT for the hospitality and tourism sector, extending the 5% rate until 31st March.
Asked by Tory MP Peter Aldous if he had any plans for future housing initiatives after the success of the stamp duty cut, as a way to generate business activity, Sunak would not be drawn and also refused to give an assurance that the increase to universal credit announced at the start of the crisis would be made permanent.