Westminster Column - Winter Economy Plan

2nd October 2020

Last week the Chancellor presented his Winter Economy Plan -  a significant package of measures to help protect jobs and revive the economy. He also announced the Budget due this autumn will now be delivered in the spring, with no update on timing of the Spending Review, which had been expected in November.

The key feature is a new employment scheme – the Job Support Scheme, to take over when the furlough scheme finishes. This means a company will continue to pay its employee for time worked, but the burden of hours not worked will be shared equally between the employee, employer and government, a third each way. The Scheme is focused on viable jobs, so employees need to be working at least a 33% of the time, and this % will move up over time. The Scheme will open from 1st November, and run for six months until the end of April 2021. 

All businesses, not just those who used the furlough scheme, will be eligible. Larger businesses (not SMEs) will only be eligible if their revenue has declined. Furthermore, there will be an expectation that large companies using the scheme will be constrained in their ability to make dividend payments or capital distributions to shareholders, and employees will not be able to be made redundant or given notice whilst on the scheme. Employers will also be able to use the Job Support Scheme as well as claim the Jobs Retention Bonus. 

The Chancellor has continued to provide broad parity of support where possible between employees and self-employed, with a further grant for self-employed small businesses who used the existing SEISS scheme. Eligibility criteria will be refined to check whether the self-employed trader is still viable and trading and is suffering lower revenues as a result of coronavirus. The grant will match the average grant of the Job Support Scheme, and represent 20% of three month earnings, for November to January.

Businesses are receiving further support through flexibility in repaying Bounce Back and CBILS loans, through the Pay as You Grow scheme. And more businesses will have further time to access the range of loan schemes.

The very welcome measure for tourism and hospitality businesses, especially in Shropshire, temporarily cutting VAT from 20% to 5% has been extended to the end of March 2021. In addition deferred VAT bills will be able to be repaid in smaller chunks by the end of January 2022 – an 18 month deferral.

These are positive measures for the economy, characteristic of the responsiveness the Chancellor Rishi Sunak has shown in the face of this pandemic. This has been followed this week by the Prime Minister’s announcement of major boosts to provide skills, both to help young people without A-levels from April to take up a fully funded course, and to help others retrain.

It is tragic we cannot save every job, but this package of support will go a long way to protecting livelihoods in South Shropshire. I am disappointed more measures have not been aligned with greening the recovery in this plan, which has real potential to create new jobs  – I am looking for more substantive steps to do so in the Spending Review, whenever this is.

Coronavirus - COVID-19

Image by Olga Lionart from Pixabay

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