@RishiSunak takes vital steps to protect jobs but many workers will still struggle to stay afloat this winter
The government today (22 Oct) announced it will significantly increase the generosity and reach of its winter support schemes to ensure livelihoods and jobs across the UK continue to be protected in the difficult months to come, supporting jobs and helping to contain the virus.
- Open businesses which are experiencing considerable difficulty will be given extra help to keep staff on as government significantly increases contribution to wage costs under the Job Support Scheme, and business contributions drop to 5%.
- Business grants are expanded to cover businesses in particularly affected sectors in high-alert level areas, helping them stay afloat and protecting jobs.
- Grants for the self-employed doubled to 40% of previous earnings.
In recognition of the challenging times ahead, the Chancellor said he would be increasing support through the existing Job Support and self-employed schemes, and expanding business grants to support companies in high-alert level areas.
This builds on agreements reached with Local Authorities moving to Alert Level very high, with extra support for businesses, jobs and the economic recovery.
Chancellor of the Exchequer Rishi Sunak said:
“I’ve always said that we must be ready to adapt our financial support as the situation evolves, and that is what we are doing today. These changes mean that our support will reach many more people and protect many more jobs.
I know that the introduction of further restrictions has left many people worried for themselves, their families and communities. I hope the government’s stepped-up support can be part of the country pulling together in the coming months.”
Joseph Rowntree Foundation (JRF) has been calling for a temporary and targeted furlough scheme to support sectors which are reliant on close contact arguing it is essential to prevent a surge in unemployment as the Coronavirus Job Retention Scheme is unwound at the end of October.
A Pre-Vaccine Jobs Risk Index produced for JRF showed that sectors such as hospitality, retail and beauty, which rely on close contact with members of the public but are not within the sphere of health, care or essential services are likely to be hit hardest by coronavirus until a vaccine is found. Around 40% of employees on the minimum wage face a high or very high risk of having their job destroyed by COVID-19 compared to less than 1% of those earning more than £41,500 per year.
To keep families afloat, JRF has also been calling on the Government to do the right thing and keep the lifeline in the form of the £20 uplift in Universal Credit and Working Tax Credit has been a lifeline for many families as they’ve struggled to get through the coronavirus storm – currently due to end in April 2021.
The Chancellor’s latest updates to the Job Support Scheme (JSS) offer welcome support to preserve jobs, but more action is needed to help families through a difficult winter and ensure that the vital social security lifeline remains in place, said Rebecca McDonald, Senior Economist at the independent Joseph Rowntree Foundation:
“Holding back the coming wave of unemployment is no easy task and it is right that the Chancellor has taken steps to protect more jobs and correct the shortcomings in the Winter Economic Plan - boosting the grants and support available to businesses, workers and the self-employed.
“With four million workers in poverty before coronavirus, we can’t expect people to stay afloat on an ever-smaller fraction of their existing income when their costs have not changed.
“It’s right that more support will now be available for people working in businesses affected by a loss of demand rather than just forced closures, but that needs to be enough for workers and their families to keep the roof over their head and food on the table through a very difficult winter.
“It remains essential that we protect the worst off during difficult times, and this makes retaining the lifeline of the £20 uplift in Universal Credit and extending it to legacy benefits even more crucial for the whole nation to make it through the coming storm.
“Too many people now find themselves on the brink of being pulled further into poverty during the course of this year. The Chancellor has taken important steps today but we can’t lose sight of the need to reduce poverty by creating good jobs for the long term”.
Neil Carberry, Chief Executive of the Recruitment and Employment Confederation said:
“The Chancellor's changes to the Jobs Support Scheme will see more firms use it as a realistic way to ride out the Covid recession. Local grant support in higher tier areas is welcome – and emphasises the need for all firms to talk to their local authority about the support available. But we are disappointed by the failure to address problems caused to the suppliers to hospitality and leisure businesses by the same fall in demand. Staffing firms in hospitality will be crucial to the sector's recovery and need support too.
“More can be done to protect jobs. Lowering the cost of labour by reducing employers National Insurance contributions will help boost hiring and keep people in work. Delivering on effective test, track and trace system is absolutely essential to helping our economy recover – and businesses are looking to Government to deliver on this.”
Alan Price, CEO of BrightHR, said:
"Another day, another important government announcement about coronavirus.
"Since the new Job Support Scheme was announced several weeks ago as the replacement to the outgoing furlough scheme for coronavirus business support, criticism has been levelled at the government that it did not go far enough. Now, with just under two weeks to go until the scheme is set to be rolled out across the UK, it seems that the Chancellor has listened to these concerns.
"Today’s amendment to the scheme focuses on companies that can remain open despite coronavirus restrictions, such as those in tiers 1 and 2 or those in tier 3 which have not been told to close entirely. As before, employees will still need to work for a portion of their normal hours, with the government and their employer funding their wage for some of the time they do not work. Applying to all businesses across all three tiers, the Chancellor’s announcement now means that companies will need to contribute less to the scheme than expected previously, with the government instead covering most of the bill from their end. Employees will also need to work fewer hours to qualify for it.
"This will likely come as welcome news for businesses, helping them to keep their wage costs further down as government support is ramped up. It does also offer more incentive to employers to keep staff on, with their employer needing to provide them fewer hours in which to work. Again, the government’s focus does seem to remain on preserving as many jobs as possible during the winter months.
"All eyes will now turn to the government to finally release detailed guidance surrounding the use of the scheme, which will hopefully clarify many of the questions that still need to be answered. In the meantime, employers should carefully consider if this announcement will provide them with the life-line they required, or if even with these changes the scheme simply will not help them to the degree they need and alternatives, such as redundancies, are necessary."
Mike Cherry OBE, Federation of Small Businesses National Chairman, said:
“This is a welcome intervention which will help protect more jobs and small businesses, as well as self-employed traders, through the difficult winter months.
"Measures to combat Covid-19 make this a tough time for many small businesses, but we are determined to make it through.
"These measures will help make that happen.”
Dame Carolyn Fairbairn, Director General, CBI said:
“The Job Support Scheme will be a welcome and much-needed successor to the furlough scheme and will protect many livelihoods when it begins. It’s right that businesses contribute if they wish to access this scheme. But with a tough winter ahead, significantly increased Government contributions to non-worked hours across all regions will do even more to protect people’s livelihoods.
“Meanwhile it’s great to see the extra grant funding give local authorities the discretion to target where support is needed most.
“This is a big step towards a more standardised approach of support for areas going into tiers 2 and 3 and those businesses that face tough times who operate within them.”
Tony Wilson, Director of the Institute for Employment Studies, commented:
'The changes to the Job Support Scheme are welcome news for workers and firms. By all-but removing the employer contribution, the benefits for firms in using this scheme rather than laying people off are far stronger and mean that we now have a workable scheme to support short-time working through the winter.
However, for the most disrupted sectors under the tightest Tier 2 and Tier 3 restrictions, the changes announced today may still not go far enough. We estimate that at least half a million jobs were furloughed in hospitality and the arts in Tier 2 and 3 areas, and many of these employers may well struggle to bring workers back for the minimum one day a week required under the scheme. If they can't do so, or can't afford to pay them for that time, then they may still have no choice but to lay workers off. So we would urge the government to use its discretion to waive the hours requirement in the most disrupted sectors in higher-alert areas.'
Responding to the statement, City of London Corporation Policy Chair Catherine McGuinness said:
“Today's announcement by the Chancellor will have been welcomed by countless bars, cafes and restaurants across the Square Mile.
“As always however, the devil will be in the detail, and we look forward to receiving further information on how the grants will work, and how many places in the City will be able to benefit.
“Previously a large number of very small businesses in the Square Mile were excluded from eligibility for grants because of the rateable value of their business premises, so I hope our concerns on this have been taken on board this time round.
“The virus is not going to go away quickly, and we urgently need to find a way to live with it. We must keep the economy operating to the maximum extent possible, not only for future prosperity but also to pay for the extensive support, like this, which so many of our sectors, businesses and communities currently need.”
Dean Sadler, CEO and Founder at Tribepad
"While restaurants and pubs have reopened, the experience is simply not the same. And many business owners are rightly worried that they do not have enough customers coming through the door to make opening worthwhile. And it may in fact be costing them more money in the long run.
"For those in tier two, it’s more than understandable they want the same support tier three businesses are receiving. As demand collapses, without being formally required to shut, they need the lockdown Job Support Scheme to stay afloat.
"Now is the time for the government to look after businesses who are vulnerable, and give them more support."
Jonathan Richards, CEO and Founder of Breathe, said:
“The latest measures of coronavirus support announced by the Chancellor today outline a patchwork of different support measures for closed businesses in tier 3 areas and those who remain open in tier 2 areas, but are struggling.
For hospitality, leisure and accommodation businesses, access to cash grants, extra support for staff and being able to backdate support payments will be welcome news as consumer demand continues to fall.
However, with the threat of mass unemployment still on the horizon, supporting struggling businesses and those facing redundancy is more important than ever”
Karen Jones, Hospitality Working Group, said:
‘’Hospitality depends on its people, those 1 in 9 of the UK workforce who have worked so hard and so willingly to make restaurants and pubs Covid secure places for our customers to come to.
"Those same people have, until today’s announcement, been deeply worried about the future as a result of the trading effect of Tier restrictions. It is a joy to think that we can now remove that burden of uncertainty, keep people in employment and focus on looking after our customers, safely and securely. Hospitality is at the centre of communities and high streets and we need to keep that flame alive, ready to light up the rebuilding of our local and national economies.
"Hospitality is all about teamship: thank you Chancellor for listening and acting in a bold and brave manner. As one team, we can go forward and continue to build an industry of which the UK is proud. A good day’’
Kate Nicholls, UK Hospitality said:
“This is a generous package of support, which will make a huge difference in safeguarding hospitality jobs. It is great that the Chancellor has listened to our concerns and those of hospitality businesses. We have been hammered harder than any other sector and this enhanced support will be crucial in making sure businesses stay afloat and jobs kept secure.”
Adam Marshall, Director General, British Chambers of Commerce said:
“This is a very significant improvement in the support available to businesses struggling with the impact of increasing restrictions across the UK.
“Chambers have been campaigning for greater support for businesses experiencing big falls in demand as a result of new restrictions, and a number of the steps announced today, including the lowering of employer contributions and the number of hours worked needed to qualify for the scheme, respond directly to our calls.
Emma McClarkin, Chief Executive of the British Beer & Pub Association, said:
“This necessary and welcome support package will help thousands of pubs with tier two restrictions who otherwise faced devastation to their businesses.
“The impact of restrictions has been immediate and deep on our sector, requiring an extensive response from Government.
“Having called for more support for businesses in our sector struggling under tier two restrictions, we warmly welcome these measures from the Chancellor today. They will help thousands of pubs and support thousands of jobs that otherwise were at real risk of being lost for good.”
David Page, Chairman of Fulham Shore said:
‘’We were pleased that Rishi Sunak came to Franco Manca to discuss both improving and simplifying government support for the UK hospitality industry. He listened carefully to what we all had to say - and he responded constructively to both to our positive suggestions and criticisms of government policy to date. In the situation we as a country find ourselves in he seemed to be acting intelligently and decisively’’
Michelle Ovens MBE, Founder, Small Business Britain
“The ongoing challenges of Covid-19 is placing small businesses under huge pressure and its vital that they have as much support as possible, as the situation across the country continues to evolve. It is good to see the government is offering this new extra help over these difficult winter months, to help protect jobs and the small businesses at the heart of the UK economy”
Stephen Phipson, Chief Executive of Make UK, said:
“The Chancellor has said that he would work hard to protect jobs and today’s statement is another critical step, particularly making the Job Support Scheme much more accessible to employers. This is especially important for areas under tighter restrictions who are the hardest hit. This will help ensure that regional economies are able to function as normally as possible so that every sector and the economy overall benefits.
Steve McNamara, General Secretary of the Licensed Taxi Drivers Association said:
“The doubling of financial support for the self-employed is very welcome news for taxi drivers and will go some way to keeping them afloat over the difficult winter months ahead. It demonstrates that the Treasury is listening and being responsive to the needs of those hit hardest by the pandemic.
"We hope that this will continue and that the level of support will be kept under review as circumstances change, to ensure it is sufficient to meet drivers’ needs.”
Thank you, Mr Speaker,
And let me speak first to the people of Liverpool, Lancashire, South Yorkshire, and Greater Manchester, and indeed other areas moving into, or already living under, heightened health restrictions.
I understand your frustration. People need to know this is not forever.
These are temporary restrictions to help control the spread of virus.
There are difficult days and weeks ahead, but we will get through this, together.
People are not on their own.
We have an economic plan that will protect the jobs and livelihoods of the British people wherever they live and whatever their situation.
And just as we have throughout this crisis, we will listen and respond to people’s concerns as the situation demands.
And I make no apology for responding to changing circumstances.
And so today we go further.
The Prime Minister was right to outline a balanced approach to tackling coronavirus:
Taking the difficult decisions to save lives and keep the R rate down, while doing everything in our power to protect the jobs and livelihoods of the British people.
The evidence is clear: a regional, tiered approach is the right way to control the spread of the virus.
My Right Honourable Friend the Chief Secretary yesterday set out for the House our economic support for businesses who are legally required to close under those new restrictions.
We’re providing billions of pounds of support for local authorities; a grant scheme for affected businesses worth up to half a billion pounds every month;
And, of course, we expanded the Job Support Scheme – with the government covering the cost of paying two thirds of peoples’ normal wages if their employer had been legally required to close.
And for areas in local alert level 3 we have made available over a billion pounds of generous up-front grants so that local authorities can support businesses, protect jobs and aid economic recovery, in a fair and transparent way.
That is our plan to support closed businesses.
But it is clear that even businesses who can stay open are facing profound economic uncertainty.
This morning, I met with business and union representatives, including those from the hospitality industry, to discuss the new restrictions.
Their message was clear: the impact of the health restrictions on their businesses is worse than they hoped.
They recognise the importance of the tiered restrictions in controlling the spread of the virus.
But a significant fall in consumer demand is causing profound economic harm to their industry.
It is clear that they, and other open-but-struggling businesses, require further support.
So, Mr Speaker, I am taking three further steps today.
First, I’m introducing a new grants scheme for businesses impacted by Tier 2 restrictions, even if they aren’t legally closed.
We will fund local authorities to provide businesses in their area with direct cash grants.
It will be up to local authorities to decide how best to distribute the grants giving them the necessary flexibility to respond to local economic circumstances.
But I’m providing enough funding to give every business premise in the hospitality, leisure and accommodation sectors a direct grant worth up to £2,100 – for every month Tier 2 restrictions apply.
And that’s equivalent to 70% of the value of the grants available for closed businesses in Tier 3. And crucially, I am pleased to confirm these grants will be retrospective.
Businesses in any area which has been under enhanced restrictions can backdate their grants to August.
I have been listening and engaging with colleagues around the House including but not only my Honourable Friends for Heywood and Middleton, Hyndburn, Penistone and Stockbridge, South Ribble, Burnley, Keighley, Cheadle, Leigh and Southport.
I’m pleased to confirm the backdating of the new grants means we are being more generous to businesses and places which have been under higher restrictions for longer.
Let no one say Mr Speaker this Government is not committed to supporting the people and businesses in every region and nation of the United Kingdom.
Second, to protect jobs, we are making the Job Support Scheme more generous for employers.
If businesses are legally required to close, as we’ve already outlined, the Government will cover the full cost of employers paying people two thirds of their salary, where they can’t work for a week or more.
For businesses who can open, it is now clear that the impact of restrictions on them, particularly in the hospitality sector, is more significant than they had hoped.
So I am making two changes to the short time work scheme to make it easier for those businesses to keep staff on, rather than make them redundant.
First, under the original scheme, employees had to work for 33% of their normal hours.
Now, we will ask them to work only 20% of their hours.
Second, the employer contribution for the hours not worked will not be 33%, as originally planned, or even 20% as it is in the October furlough scheme – it will reduce to 5%.
And the scheme will apply to eligible businesses in all alert levels, so businesses that are not closed but face higher restrictions in places like Liverpool, Lancashire, South Yorkshire and Greater Manchester, as well as the devolved nations, will be able to access greater support.
These changes mean more employers can access the scheme and more jobs will be protected.
We have made this one of the most generous versions of a short time work scheme anywhere in the world.
It is better for businesses, better for jobs, and better for the economy.
Third, as we increase the contribution we’re making towards employees’ wages, I’m increasing our contribution to the incomes of the self-employed as well.
Today, we are doubling the next round of the self-employed income support from 20% to 40% of people’s incomes, increasing the maximum grant to £3,750.
So far, through this crisis, we have now provided over £13 billion of support to self-employed people.
Sole traders, small businesses and self-employed people are the dynamic entrepreneurial heart of our economy – and this government is on their side.
In conclusion, Mr Speaker,
A wage subsidy for closed businesses.
A wage subsidy for open businesses.
Cash grants of over £2,000 a month for Tier 2 businesses and up to £3,000 for closed businesses.
Support for local authorities.
Support for the self-employed.
Support for people’s jobs and incomes.
All on top of over £200 billion of support since March.
This is our plan: a plan for jobs, for businesses, for the regions, for the economy, for the country; a plan to support the British people.
And I commend this statement to the House.
Chancellor Rishi Sunak
Job Support Scheme (JSS)
Recognising the pressure businesses in some sectors and areas are facing, today’s announcement lightens the burden of keeping on staff.
When originally announced, the JSS – which will come into effect on November 1 - saw employers paying a third of their employees’ wages for hours not worked, and required employers to be working 33% of their normal hours.
Today’s announcement reduces the employer contribution to those unworked hours to just 5%, and reduces the minimum hours requirements to 20%, so those working just one day a week will be eligible. That means that if someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer only £44.
Employers will continue to receive the £1,000 Job Retention Bonus. The Job Support Scheme Closed for businesses legally required to close remains unchanged.
- The JSS starts to operate from 1 November and coves all Nations of the UK. For every hour not worked, the employee will be paid up to two-thirds of their usual salary.
- The government will provide up to 61.67% of wages for hours not worked, up to £1541.75 per month (more than doubling the maximum payment of £697.92 under the previous rules). The cap is set above median earnings for employees in August at a reference salary of £3125 per month.
- Example: a typical full-time employee in the hospitality industry is paid an average of £1,100 per month. Under the Jobs Support Scheme for open businesses, they will still take home at least £807 a month. All the employer needs to pay is a total of £283 a month or just £70 a week; the government will pay the rest.
- Employers using the scheme will also be able to claim the Job Retention Bonus (JRB) for each employee that meets the eligibility criteria of the JRB. This is worth £1,000 per employee. Taking JSS-Open and JRB together, an employer could receive over 95% of the total wage costs of their employees if they are retained until February.
Today’s announcement increases the amount of profits covered by the two forthcoming self-employed grants from 20 per cent to 40 per cent, meaning the maximum grant will increase from £1,875 to £3,750.
This is a potential further £3.1bn of support to the self-employed through November to January alone, with a further grant to follow covering February to April.
- The Government will provide two taxable SEISS grants to support those experiencing reduced demand due to COVID-19 but are continuing to trade, or temporarily cannot trade.
- It will be available to anyone who was previously eligible for the SEISS grant one and grant two, and meets the eligibility criteria.
- Grants will be paid in two lump sum instalments each covering 3 months. The first grant will cover a three-month period from the start of November 2020 until the end of January 2021. The Government will pay a taxable grant which is calculated based on 40% of 3 months’ average trading profits, paid out in a single instalment and capped at [£3,750.]
- The second grant will cover a three-month period from the start of February until the end of April 2021. The Government will review the level of the second grant and set this in due course.
The Chancellor has also announced approved additional funding to support cash grants of up to £2,100 per month primarily for businesses in the hospitality, accommodation and leisure sector who may be adversely impacted by the restrictions in high-alert level areas. These grants will be available retrospectively for areas who have already been subject to restrictions, and come on top of higher levels of additional business support for Local Authorities moving into Tier 3 which, if scaled up across the country, would be worth more than £1 billion.
These grants could benefit around 150,000 businesses in England, including hotels, restaurants, B&Bs and many more who aren’t legally required to close but have been adversely affected by local restrictions nonetheless.
- We are providing additional funding to allow Local Authorities (LAs) to support businesses in high-alert level areas which are not legally closed, but which are severely impacted by the restrictions on socialising. The funding LAs will receive will be based on the number of hospitality, hotel, B&B, and leisure businesses in their area.
- LAs will receive a funding amount that will be the equivalent of:
- For properties with a rateable value of £15k or under, grants of £934 per month
- For properties with a rateable value of between £15k-£51k, grants of £1,400 per month
- For properties with a rateable value of £51k, grants of £2,100 per month
- This is equivalent to 70% of the grant amounts given to legally closed businesses (worth up to £3,000/month).
- Local Authorities will also receive a 5% top up amount to these implied grant amounts to cover other businesses that might be affected by the local restrictions, but which do not neatly fit into these categories.
- It will be up to Local Authorities to determine which businesses are eligible for grant funding in their local areas, and what precise funding to allocate to each business – the above levels are an approximate guide.
- Businesses in Very High alert level areas will qualify for greater support whether closed (up to £3,000/month) or open. In the latter case support is being provided through business support packages provided to Local Authorities as they move into the alert level. The Government is working with local leaders to ensure the Alert Level very high packages are fair and transparent