UK Government unveil new jobs support scheme

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Under the UK’s new „Jobs Support Scheme„, the government will fund part of the earnings an employee loses due to their hours being cut – provided they work at least a third of their normal hours and are paid as normal.

The change means that an employee on £2,000 a month working 50% less hours would get £1,000 in normal salary plus £333 more from their employer and £333 from the government.

The new scheme will start in November and run for a period of 6 months; businesses that choose to take part will not be able to make their employees redundant. All small and medium-sized businesses are eligible for the scheme, but large companies must prove their turnover has dropped during the pandemic.

The „Jobs Support Scheme” replaces the furlough scheme that has been in place since lockdown, which offered to cover up 80% of wages. Rishi Sunak, the UK”s Chancellor of the Exchequer, explained in Parliament yesterday why he thought the furlough scheme could not continue:

„It is not sustainable or affordable to continue to provide the level of support that we did at the beginning of this crisis”.

On top of the Job Support Scheme, the Chancellor of the Exchequer announced that the self-employed grant would be extended on similar terms as the new support scheme. The UK Government have also frozen VAT at 5% for the hospitality and tourism sector until the end of March, while a seperate „pay as you grow” scheme is to give firms extra time to pay back bounce loans. They can now be paid over a period of up to 10 years as opposed to 6.

Frances O’Grady, head of the TUC trade union, said the Job Support Scheme would be a „lifeline” for many companies:

„Unions have been pushing hard for continued jobs support for working people. We are pleased the chancellor has listened and done the right thing. The job support scheme will provide a lifeline for many firms with a viable future beyond the pandemic”

Logistics UK Chief Executive David Wells also welcomed the news:

“Logistics UK warned government that urgent action was needed to protect struggling businesses to avoid an avalanche of redundancies and insolvencies; we are pleased the Chancellor has listened to our fears and offered a platform for economic growth and recovery. With the UK remaining in crisis mode as coronavirus cases rise, ongoing, flexible financial support for businesses will be essential until the economy recovers. We are pleased to see the targeting of hospitality, tourism and small and medium sized companies, all of whom have been hit particularly hard by the COVID-19 containment measures. We also support the measures to assist businesses with cashflow issues with more generous loan terms and VAT deferrals.”

However, several opposition MPs said the scheme either came too late or didn’t offer enough. Alison Thewliss of the SNP said that the scheme would not provide comfort to those who had lost their jobs, while Labour’s Rachel Hopkins lamented that redundancies are already being made in her constituency at Luton Airport.

Meanwhile, Jonathan Geldart, Director General of the Institute of Directors, struck a more balanced tone in his statement:

„These new measures should bring some relief to many directors fearing a harsh winter for their businesses and people. As the virus wears on, the Treasury is right to seek a balance between protection and adjustment. However, at first blush it’s not yet clear how much the Job Support Scheme will help hard-pressed firms hold onto staff. The Chancellor may also have missed a trick by not combining the Scheme with measures to encourage wider job creation, for instance by lowering employment costs through reduced Employers’ NICs.”

Moreover, Geldart warned that the scheme would result in many self-employed and small company directors going without support. He also wishes to see the government widening its loan scheme to help more small and medium size businesses invest in digital technology for better home working.

The ins and outs of the Job Support Scheme will be of interest to workers in a wide variety of professions, including truck drivers. Although the UK is currently experiencing a shortage of drivers, and demand is expected to continue in the coming weeks, there are fears of noticeable redundancies in the new year.