Summary - The Government’s Winter Economy Plan
Article Date: 2020-09-25
In the last hour Chancellor Rishi Sunak set out the Government’s Winter Economy Plan to the House of Commons. The measures, which Sunak described as “radical interventions”, focused on protecting jobs, improving businesses’ cash flows and providing further support to the sectors that have been worst hit by the virus.
The Chancellor’s renewed Job Support Scheme will last for six months, and splits between Government and employers the wage bill of workers who can return to work part-time for at least 33% of their hours. It is likely to go down well with Conservative backbenchers, who have been calling for more support for local businesses, without committing to an extension of the expensive furlough scheme.
The Chancellor also announced a range of measures designed to give businesses which have already availed of Government support, including small business, more time to repay loans and back taxes. The 15% VAT cut for the tourism and hospitality sectors has also been extended until the end of March next year.
Responding to the measures, Labour’s Shadow Chancellor Anneliese Dodds described the Government’s decision to implement targeted wage support as a U-turn, arguing that she had called for similar measures to be introduced but had been rebuffed on multiple occasions.
Please see below for a summary of the measures included in the plan.
The Government’s Winter Economy Plan
Job Support Scheme
- UK-wide 6 month scheme starting 1 November
- Directed at supporting viable businesses with employees in work but facing suppressed demand
- To be eligible employees must work a minimum of 33% of their hours
- For remaining hours not worked, the Government and employer play 1/3 wages each
- All SMEs are eligible for the scheme, with only those large companies who have seen their turnovers fall qualifying
- The scheme means that employees working 33% of their hours will receive at least 77% of their pay
Self-Employment Income Support Scheme
- In an effort to continue to provide parity between the employed and self-employed, the pre-existing scheme will be extended until 30 April 2021
- The scheme extension is aimed at supporting viable traders who are faced with reduced demand over the winter months, covering 20% of average monthly trading profits via a government grant
Improving cash flow
- The one million businesses which have borrowed under the Bounce Back Loan Scheme will be offered the choice of more time and greater flexibility for their repayments under a new “Pay as you Grow” scheme, which will allow the loans to be paid back within 10 years. The scheme will also allow businesses to move to interest only payments or suspend payments for up to six months if they are in “real trouble” without impacting credit ratings
- Lenders have been enabled to offer Coronavirus Business Interruption Loan Scheme borrowers more time – up to 10 years – to make up their repayments where needed too
- The application deadline for all coronavirus loan schemes – including the future fund – has been extend to 30 November to ensure that more businesses can benefit from government-backed support
- The Government will announce a new loan scheme in January
- Businesses who deferred their VAT will no longer have to pay a lump sum at the end of March next year. They will have the option of splitting it into smaller, interest free payments over the course of the 11 months
- Self-assessed income tax payers who need extra help can also now extend their outstanding tax bill over 12 months from January
Further sector support
- The Government is extending the 15% VAT cut for the tourism and hospitality sectors, who have been badly hit by the virus, until the end of March next year