It is fundamentally wrong to keep people in jobs that only exist inside the furlough.
- Rishi Sunak, Chancellor of the Exchequer
Today, the Chancellor Rishi Sunak announced new measures to support businesses and people through the continuing economic impacts of the coronavirus pandemic. This briefing lays out the key aspects of the plan and its implications for Locality members.
The Job Support Scheme
The most significant announcement was the Job Support Scheme. This scheme will replace the existing Job Retention (furlough) scheme.
In speaking about why the furlough scheme is coming to an end, the Chancellor argued that “it is fundamentally wrong to keep people in jobs that only exist inside the furlough” and spoke about the importance of supporting ‘viable’ jobs. He argues this new scheme will help business and organisations identify those jobs which are viable beyond the furlough.
The Job Support Scheme will support people in work, on reduced hours.
How will the scheme work in practice?
Employees will have to work at least a third of their normal hours to be eligible for the scheme. Employers will pay employees for the time they work (whether that’s the minimum 33% or more than that).
The remaining hours not worked will be covered by a combination of the employer and the government. Each will pay the employer for a third of these unworked hours.
This Treasury graphic illustrates how this would work in practice for an employee working the minimum 33% of their hours:
- the employer would pay 55% of their wages
- the employee would receive 77% of their pay
- the government would cover 22% of this employee’s wages
The government contribution will be capped at £697.92 per month.
The scheme will begin in November.
All SMEs are eligible. We will be urgently seeking clarity on the legal forms eligible for this scheme – to check whether community organisations and charities are eligible.
Larger firms will only be eligible if their turnover has fallen through the crisis.
The scheme is open to both those that have and haven’t used the furlough scheme to date.
Other measures announced today
• The extension of the Self-Employed Income Support Scheme. The grant will be limited to self-employed individuals who are currently eligible for the SEISS and are actively continuing to trade but are facing reduced demand due to COVID-19. The scheme will last for 6 months, from November 2020 to April 2021.
• The hospitality and tourism VAT reduction will be extended. The cut from 20% to 5%, originally due to end on 12 January 2021, will now run until 31 March 2021.
• Extension of access to loan schemes. Organisations will now have until 30 November to access a range of government—backed loan schemes. The most relevant for Locality members is the Bounce Back Loans Scheme (BBLS). Loans are between £2,000 and £50,000, capped at 25% of turnover.
• Pay as you Grow. The government have also extended the repayment period for the BBLS. It will give those that borrowed under the BBLS the option to repay their loan over a period of up to ten years.
We’ll be engaging with Locality members on exactly what the implications of this are for community organisations as further details emerge.
Join our webinar on Friday 2 October to discuss with Locality staff and other members.