Personal Law

Chancellor announces Job Support Scheme

Estimated read time: 3 mins

Carrie Tennick, September 24, 2020

The chancellor has announced his plan to support the economy and protect jobs into the winter.

It comes after the prime minister announced further measures to stop to spread of coronavirus in the UK, which has seen cases rise significantly in recent weeks.

Addressing MPs, Rishi Sunak said the government’s Job Support Scheme will top up the wages of employees working at least one-third of their normal hours. He explained that the scheme will cover two-thirds of workers’ lost pay. Employers will have to pay for the hours worked.

But this would be restricted to those in “viable jobs”.

What is the Job Support Scheme?

The Job Support Scheme will begin in November, when the furlough scheme has ended, and will continue for six months.

According to the Treasury, viable jobs are those in which “employees must be working at least 33% of their usual hours”. For the hours not worked by an employee, businesses and the government will each pay one-third of their equivalent salary – 22% each. This means an employee will receive a minimum of 77% of their normal pay.

The grant available will be calculated based on employee’s usual salary, and will be capped at £697.92 per month.

Businesses that did not make use of the furlough scheme will be able to sign up to the Job Support Scheme. The Treasury said further guidance on the scheme will be released “in due course”.

The chancellor also announced it will be extending the Self Employment Income Support Scheme Grant (SEISS). It will provide an initial taxable grant to people currently eligible for the SEISS and are operational but face reduced demand due to the pandemic. A further grant may be available to support the self-employed from February 2021 until the end of April.

Hospitality tax cuts remain

The government will also extend the 15% VAT cut for the tourism and hospitality sectors it introduced during lockdown. It will now run until the end of March 2021.

It is intended to support these “severely impacted” industries as new restrictions – including 10pm closing times – were placed on them this week. The Treasury said it will give businesses “the confidence to maintain staff as they adapt to a new trading environment”.

Sunak said that the virus’ recent “resurgence” and the measures the government is taking to combat it, “pose a threat to our fragile economic recovery”.

He went on to add: “Our approach to the next phase of support must be different to that which came before. The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve.”

Support for workers welcomed

The Job Support Scheme has been welcomed by a number of business leaders.

Dame Carolyn Fairbairn, director-general of the Confederation of British Industry, said: “These bold steps from the Treasury will save hundreds of thousands of viable jobs this winter. It is right to target help on jobs with a future, but can only be part-time while demand remains flat. This is how skills and jobs can be preserved to enable a fast recovery.”

Meanwhile, general secretary of the Trades Union Congress Frances O’Grady said: “This scheme will provide a lifeline for many firms with a viable future beyond the pandemic.   

“But there’s still unfinished business. Unworked hours under the scheme must not be wasted. Ministers must work with business and unions to offer high-quality retraining, so workers are prepared for the future economy.”

However, there was acknowledgement that not all jobs will be saved. Paul Johnson, head of the Institute for Fiscal Studies, tweeted that “a lot on furlough now likely to lose their job”.

First4Lawyers is here to help those struggling with work-related problems. If you need the services of an employment solicitor, give us a call or make an enquiry online.

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