How new Jobs Support Scheme will work
Chancellor Rishi Sunak announces measures to help businesses weather pandemic
The Government today (Thursday) unveiled the next phase in its plan to protect jobs and the economy, including a new support scheme which keeps employees in work on shorter hours instead of making them redundant.
Chancellor of the Exchequer Rishi Sunak spoke in the Commons to announce the New Jobs Support Scheme, replacing the existing Coronavirus Job Retention Scheme, which saw million of employees furloughed during the national lockdown with 80 per cent of their wages paid.
Under the new scheme, employees who are enrolled must work at least a third of their normal hours and be paid for that work by their employer as normal.
The Government will then increase the employee's wages by covering a third of the hours the employee doesn't work which will be matched by the employer, totalling 77 per cent of their usual wage.
The Government will pay no more than £700 a month.
This will run for six months and begin in November.
The Chancellor explained the scheme would be targeted at small and medium-sized firms who need then most support, and that large businesses would only be available if their turnover has fallen during the crisis.
In what he described as adapting and evolving to the new normal, Mr Sunak said the the Government's response is the result of a 'permanent adjustment' to protecting the economy.
He said: "There has been no decision harder than to end the furlough scheme.
"As the economy reopens it is fundamentally wrong to hold people jobs that only exist inside the furlough.
"I cannot save every business, I cannot save every job – no Chancellor could.
"But what we can and must do is deal with the real problems employers and business are facing now."
Mr Sunak said the aim is to protect 'viable jobs' which can provide 'genuine security.'
Alongside the announcement of the scheme, the Chancellor also provided information on how businesses will be supported over the coming months.
Under a new Pay as you Grow plan, loans taken our by small businesses can now be extended from six to 10 years, nearly halving the average monthly repayment.
Businesses that take up the scheme will not see their credit rating affected as a result.
There will also be an extension to the deadline of all loan schemes until the end of this year, and the Government has already started work on a new programme for January onwards.
For the 150,000 businesses in the hospitality and tourism sector, VAT rates will remain at five per cent until the end of March 2021.
Under previous plans, the rate would have returned to 20 per cent in January.
Mr Sunak said: "This is an important evolution in our approach. Our lives can no longer be put on hold."
He also referred to the newly-announced measures as 'radical' interventions in the UK's labour market, "policies we have never tried in this country before".