Chancellor’s (latest) plan for jobs

23 Oct 2020

In response to the worsening Covid-19 situation and significant pressure from all sides the Chancellor of the Exchequer Rishi Sunak announced further support for business on Thursday 22nd October.  The key points of this latest iteration of his plan for jobs are as set out below.

Job Support Scheme (JSS)

When originally announced, the JSS – which will come into effect on 1 November – saw employers paying a third of their employees’ wages for hours not worked, and required employers to be working 33% of their normal hours.

The latest announcement (which applies to businesses which remain open under local lockdown rules) reduces the employer contribution to those unworked hours to just 5%, and reduces the minimum hours requirements to 20%, meaning that employees who normally work full time will only have to work one day a week to qualify. 

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). With the 5% minimum salary paid by the employer this takes the employee to 2/3rds of their normal pay for the time not worked.  The cap is set by reference to a salary of £3,125 per month meaning anyone who on average earns more than that amount per month will not receive the full 2/3rds of their normal pay for their unworked hours.

For example take a full-time employee who is paid an average of £1,100 per month who now works only one day per week.  Under the revised scheme the employee will be paid £220 for the day they work.  The Government will then pay £542.66 for the hours not worked, and the employer £44.  In total therefore the employee will receive £806.66 per month.

The extension to the JSS previously announced for employees of businesses forced to close under local or national lockdown rules remains unchanged by this announcement – details of that scheme can be found here:

Self-employed income support scheme (SEISS)

Under the previously announced phases 3 & 4 of the SEISS the government had announced that the maximum grant under each phase would be £1,875.  The announcement yesterday means the maximum grant for phase 3 (covering the period November to January) will be doubled to £3,750 calculated by reference to 40% of average trading profits.  The grant for phase 4 (February to April) will be reviewed in due course. 

The revised grants will be available to anyone who was previously eligible for the SEISS grant one and grant two, and meets the eligibility criteria and will be paid in two lump sums.

Business Grants – England

Additional funding is to be provided to allow Local Authorities in England 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.

Local Authorities will receive a funding amount that will be the equivalent of:

  • For properties with a rateable value of £15,000 or under, grants of £934 per month.

  • For properties with a rateable value over £15,000 and below £51,000, grants of £1,400 per month.

  • For properties with a rateable value of exactly £51,000 and over, 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.  Presumably each Local Authority will announce details in due course and it may be that additional funding will be provided to the Welsh Government to utilise as it considers appropriate.

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.

WR Partners comment – any additional support for businesses at this difficult time is welcome, and it is pleasing that the extended SEISS and JSS have not been limited to just those areas which are under the higher levels of alert.  It is evident that policy is being made to try to respond to the quickly changing circumstances but the impact of this is that the complexity increases and ease of compliance consequently reduces at the same time.  We are just over a week away from the launch of the JSS and the full details of the scheme are not yet available.  HMRC have said that they will be taking a far more proactive approach to compliance with the rules than was the case with the furlough scheme – it is to be hoped they also recognise the challenge for employers in understanding and applying the rules in a very short space of time and take a relatively pragmatic approach at least in these early stages.

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