The Job Support Scheme has been revamped and new grants made available for struggling businesses.
The furlough replacement is due to start on the 1st November, but it’s been clear it’s not enough for a number of businesses.
For a start, many have been severely impacted by Tier 2 restrictions, yet not able to claim the support that comes with Tier 3 if they’re legally forced to close by the government. As a result, pressure has been growing on the government to do something.
Today the Chancellor Rishi Sunak has revealed some big changes to the previously announced schemes. Here’s what you need to know.
Job Support Scheme revamp
The Job Support Scheme hasn’t gone down well. It was meant to encourage bosses to keep people in work rather than make them redundant. But it didn’t help businesses that couldn’t open, and even worked out more expensive to employ two people part time than one person full time.
To start, a month ago an extension of the scheme was announced where the two-thirds of salaries would be paid by the government for businesses forced to close for a week or more.
This doesn’t help those in Tier 2 though, or those indirectly impacted by the closure of places like pubs and restaurants (for example suppliers).
So the initial scheme, due to come in from 1st of November 2020 is changing again.
Initially employees would have to work 33% of their hours, and employers would contribute a third of remaining wages.
Now people will only have to work a minimum of 20% of their hours to be eligible. And employers will only have to contribute 5% of the hours not worked. This means the government will pay 62% of the non-worked hours. There will still be a reduction in total wages vs what people would earn if they worked full time.
There’s a cap of £1,541.75 a month for the government contribution.
This is for all businesses in all areas, not just those in tiers 2 and 3.
Here’s a chart from the government:
We're making the Open Job Support Scheme more generous to protect jobs during lower demand.
— Rishi Sunak (@RishiSunak) October 22, 2020
– Government now pays at least 62% for hours not worked
– Employer contribution cut from 33% to 5%
– Employees now take home at least 73% of pay for working a new minimum 20% of hours pic.twitter.com/bSXr0zup6d
Self-employed
They’ll also increase the government contribution for the self-employed via grants from 20% to 40%, of their usual earnings, meaning the most could be £3,750 a month.
It’ll be available to any self-employed people who have had a significant fall in trade or stopped working due to coronavirus, regarldess of the tier level where they are based.
The grant will cover November to January, and there will be another for February to April 2021 (though the size of this is to be set).
However, it’ll be the same criteria as before, meaning many will still miss out.
New grants for Tier 2 businesses
Many leisure and hospitality businesses have said they’re struggling massively yet get nothing with the new Job Support Scheme if they aren’t forced to close.
Now there will be new grants for those in Tier 2 areas. The money will be sent to local authorities who will decide on how to distribute the funds.
There will be enough to give a grant of up to £2,100 a month to every hospitality, leisure and hospitality businesses in the country while under Tier 2 restrictions.
They’re retrospective for any business that’s been in enhanced restrictions, so they can be backdated to August. Good news for places like Bolton.
These are on top of the grants announced for Tier 3 affected businesses.