In what have been a series of mini Budgets this year, the Chancellor has announced more measures to help firms and workers over the coming months.
The government is being more generous with its winter support schemes, on top of its Winter Economy Plan, to support firms and jobs.
Businesses that are experiencing considerable difficulty will get extra help under the Job Support Scheme, with the government increasing its contribution to wage costs.
Business grants will be expanded to cover firms in Covid high-alert level areas.
Grants for the self-employed payable in February and May 2021 will be doubled from 20% to 40% of previous earnings
Job Support Scheme (JSS)
(See also a subsequent and more detailed article on JSS here.)
The original version of JSS, taking effect from 1 November, would have seen employers whose businesses remain open paying a third of their employees’ wages for hours not worked, and would have required employees to be working 33% of their normal hours.
The Chancellor has now reduced the employer contribution to those unworked hours to just 5%, and reduced 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.
This improved version - or JSS Open as it's called - applies to all open businesses irrespective of what tier of restrictions they are in.
This is a significant shift by the government in that it has stepped back from transferring the majority of the financial burden of wages onto the employer.
However, Class 1 employer NICs and pension contributions remain payable by the employer.
Employers will also continue to receive the £1,000 Job Retention Bonus.
The Tier 3 lockdown version of the Job Support Scheme (JSS Closed) for businesses legally required to close - otherwise know as the local furlough scheme for those in Tier 3 restrictions - remains unchanged. So the gap in generosity between the two versions has been reduced.
The Chancellor has increased 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.
The Chancellor has also announced 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.
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.
Job Support Scheme - open
- The JSS starts to operate from 1 November and covers all parts 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 £1,541.75 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 £3,125 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. The government says that taking JSS and JRB together, an employer could receive over 95% of the total wage costs of their employees if they are retained until February.
- 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 three 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 government is 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 £15,000 or under, grants of £934 per month.
- For properties with a rateable value of between £15,000-£51,000, grants of £1,400 per month.
- For properties with a rateable value of £51,000, 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.
For further help, please check out our Business after COVID-19: Transition Knowledge Hub.