Sunak extends support to businesses in lower tiers
Under growing pressure to support businesses facing losses of revenue under the government’s tiered Covid-19 lockdown strategy, Chancellor Rishi Sunak updated his support plans this morning.
Chancellor Rishi Sunak returned to the House of Commons for the third time to refine his Covid-19 economic plans. The enhanced support measures include:
- An extended grant scheme to provide £2,100 every month to businesses affected by Tier 2 lockdown restrictions
- More generous Job Support Scheme to cover 95% of two-thirds of normal salary for any workers unable to work for two weeks or more.
- Doubling Self Employed Income Support (SEISS) grants to £3,750.
“I understand your frustration,” the Chancellor told those regions struggling under lockdown conditions. “These are temporary restrictions to control the spread of the virus.
“People are not on their own. We have an economic plan to protect the jobs of people, wherever they are and whatever their situation. We will listen and respond to their concerns. I make no apology for responding to changing circumstances. So we will go further.”
Support measure overview
Extended Job Support Scheme – Even before the scheme comes into effect on 1 November, the funding formula has been adjusted to reduce the employer contribution to the hours employees weren’t able to work from 33% to just 5%. The threshold for support kicking in was also lowered from 33% to 20%, so those working just one day a week will be eligible. According to the Treasury’s example calculation, for employees being paid £587 for their unworked hours, the government would contribute £543 and the employer £44.
Describing it as “one of most generous job support schemes in the world”, the Chancellor said it will apply to eligible businesses in areas affected by any of the three current alert levels.
Before the Chancellor got up to speak AccountingWEB member fawltybasil2575 pointed out that the guidance for version 1 of the JSS had not yet been released. Perhaps the HMRC drafting team was ordered to start adjusting the conditions and criteria while work was still in progress.
[Update, 5pm, 22 October: Just before close of play today, the Treasury released new guidance covering both the JSS Open (for businesses that remained open, but affected by restrictions) and JSS Closed (for businesses required to shut up shop).]
Self-employed grant – Today's announcement increases the profits covered by the two forthcoming self-employed grants from 20 % to 40 %, meaning the maximum grant will increase from £1,875 to £3,750.
The grants will be available to anyone who was previously eligible for the first two SEISS grants and will be paid in two instalments, the first covering three months from the start of November 2020 and the next to follow at the beginning of February.
“We have provided £13bn to self-employed workers,” Sunak said. “Sole traders, small businesses and self-employed people are the dynamic, entrepreneurial heart of the economy and this government is on their side.”
Business grants – Acknowledging the effects of lockdown restrictions on hospitality businesses that remain open in areas covered by Tier 2 restrictions, the government is setting up a new £1bn grant fund that will be distributed by local authorities to support businesses in their areas. The grants will be retrospective so that businesses operating in areas under enhanced restrictions can get grants going back to August. With an estimated 150,000 businesses eligible for the grants, the average amounts affected businesses are likely to receive is £2,100, the Chancellor said.
‘Patchwork of poor ideas’
Reflecting the exasperation of constituents (and their accountants) who have been wrestling with all the different and changing support measures announced in recent months, Labour shadow chancellor Anneliese Dodds took Sunak to task for his haphazard support plans.
“For months we’ve urged the Chancellor to get ahead of the looming unemployment crisis. Instead we’ve had a patchwork of poor ideas rushed out at the last moment,” she told the Commons.
Describing the government’s approach to businesses in Tier 3 areas as “shambolic”, Dodds pointed out that the deadlines for consulting employees on redundancies in both large and small businesses had passed before the Chancellor realised he needed to reform the furlough scheme that is ending on 1 November.
“How many jobs have been lost because of that inaction? More than 1m… The Chancellor could have done much more if he had acted sooner.”
By the time she was speaking, AccountingWEB members were posting their thoughts in Any Answers. “He’s now just making this up on the hoof. We haven’t even got details of the main Job Support Scheme,” wrote Aweb72.
Duggimon added: “I think I’ve reached the limits of new schemes for the year and will have to have a lie down.”
The subsequent Treasury release of new JSS guidance later in the afternoon will clarify some important points about how the two variants of the Job Support Scheme will operate, but may just add to the stresses experienced by Duggimon and other accountants. Rebecca Cave has now published a further Get the details right guide to the scheme on AccountingWEB.
You might also be interested in
AccountingWEB’s interim Editor in Chief has been with the site since 1999 and returned to the editorial hot seat in March 2020 to lead the hunt for a long-term successor... Send a DM if you're interested! When not tending to the needs of AccountingWEB members and geeking out on their technology habits, he devotes much of his time to his oddball...