The government’s Job Support Scheme (JSS) will be expanded to protect jobs and support businesses required to close their doors as a result of coronavirus restrictions, @RishiSunak announced today (9 Oct).
- Government will pay two thirds of employees’ salaries to protect jobs over the coming months
- Cash grants for businesses required to close in local lockdowns also increased to up to £3,000 per month
Under the expansion, firms whose premises are legally required to shut for some period over winter as part of local or national restrictions will receive grants to pay the wages of staff who cannot work - protecting jobs and enabling businesses to reopen quickly once restrictions are lifted.
The Government will support eligible businesses by paying two thirds of each employees’ salary (or 67%), up to a maximum of £2,100 a month.
Chancellor of the Exchequer, Rishi Sunak, said:
“Throughout the crisis the driving force of our economic policy has not changed.
“I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves.
“The expansion of the Job Support Scheme will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time.”
Under the scheme, employers will not be required to contribute towards wages and only asked to cover NICS and pension contributions, a very small proportion of overall employment costs. It is estimated that around half of potential claims are likely not to incur employer NICs or auto-enrolment pension contributions and so face no employer contribution.
Businesses will only be eligible to claim the grant while they are subject to restrictions and employees must be off work for a minimum of 7 consecutive days.
The scheme will begin on 1 November and will be available for six months, with a review point in January. In line with the rest of the JSS, payments to businesses will be made in arrears, via a HMRC claims service that will be available from early December. Employees of firms that have been legally closed in the period before 1 November are eligible for the CJRS.
The scheme is UK wide and the UK Government will work with the devolved administrations to ensure the scheme operates effectively across all four nations.
This comes alongside intensive engagement with local leaders today on potential measures are coming in their areas.
In addition to expansion of the JSS, the government is increasing the cash grants to businesses in England shut in local lockdowns to support with fixed costs. These grants will be linked to rateable values, with up to £3,000 per month payable every two weeks, compared to the up to £1,500 every three weeks which was available previously. This could benefit hundreds of thousands of businesses, including restaurants, pubs, nightclubs, bowling alleys and many more.
The devolved administrations in Scotland, Wales and Northern Ireland will benefit from a £1.3bn increase to their guaranteed funding for 2020-21 - allowing them to continue their response to Covid-19 including through similar measures if they wish.
These measures will sit alongside the original JSS - which is designed to support businesses that are facing low demand over the winter months - and the £1,000 Job Retention Bonus (JRB) which encourages employers to keep staff on payroll.
They build on the Government’s wider package of unprecedented measures to help protect, create and support jobs through the pandemic, to ensure that nobody is left without hope or opportunity.
Dave Innes, Head of Economics at the Joseph Rowntree Foundation, said:
“The Chancellor is right to take further action to protect jobs in areas of the country facing tougher restrictions. This will give reassurance to many workers in these places whose jobs would otherwise be at risk. However, there will still be many jobs lost in the coming months, not least because the Job Support Scheme is still not generous enough to protect jobs in hard-hit sectors in non-locked-down areas.
“It is vital that we support those who lose their jobs or experience an income shock to avoid being pulled into poverty. The Chancellor must commit to making the £20 per week increase to Universal Credit permanent and extend this same support to those on legacy benefits.
“We need to do all we can to pursue a good jobs recovery which equips everyone with the skills and retraining opportunities they need to get back into work and achieve a decent livelihood.”
Sophie Wingfield, Director of Policy at the Recruitment and Employment Confederation, said:
“Businesses which find themselves under tougher Covid restrictions needed this support to help keep their staff in jobs. It’s the right call. But the Chancellor must be mindful that shutting of businesses in affected areas will have knock-on effects right down the supply chain.
"This includes recruitment firms which have been working hard to supply staff to businesses in sectors like hospitality as they reopened. We need to make sure the right support reaches those businesses too. We must also ensure temporary workers, a huge source of strength for businesses right now, do not fall through the net and that the scheme works effectively for all forms of worker – which took too long to establish in the original furlough scheme.”
Michelle Ovens, Founder, Small Business Britain said:
“It is good to see the government continuing to intervene for small businesses as the situation in communities evolves over the winter. Small businesses are facing huge challenges and need all the help they can get. I look forward to all parts of society pulling together to help small businesses get through this period and move forward with confidence in 2021.”
Mike Cherry OBE, Federation of Small Businesses National Chairman, said:
“Thousands of small firms will be pleased to see the Chancellor embracing two of FSB’s suggestions to the Treasury for greater, targeted support for small businesses whose premises are enforceably closed by government lockdown.
"Evolving the Job Support Scheme to provide 2/3 of total salary costs together with enhancing existing cash grants for those faced with this scenario are both game-changers, and it’s welcome to see them adopted today. We will work with Government on clarity on where and when any new restrictions will apply, and clear, accessible small-business-friendly guidance to make sure this help gets to those facing a lockdown of their business premises.”
Dame Carolyn Fairbairn, Director General, CBI said:
“The steep rise in infections in some areas means new restrictions to curb numbers feel unavoidable.
“The Chancellor’s more generous job support for those under strict restrictions should cushion the blow for the most affected and keep more people in work.”
Dr Roger Barker, Director of Policy, IoD said:
"It is absolutely right for the government to step up its support, which must match the restrictions businesses are being put under. This new intervention should provide a lifeline for many companies and people impacted by the efforts to stop the spread of the virus."
Announcing the expanded Job Support Scheme, Chancellor of the Exchequer, Rishi Sunak, said:
"Starting today and over the weekend, the government will engage with local leaders on the next steps on further health measures in their areas.
"So I want to set out the next stage of our Winter Economy Plan: to provide extra support for businesses and jobs who may be asked to close over the coming weeks and months.
"First, as I have said throughout this crisis: whatever extra resources our NHS needs to cope with coronavirus – it will get.
"We have already provided an extra £3 billion for NHS winter capacity – and stand ready to go further if required.
"Our economic priority is simple: we need to protect jobs.
"The way we do that needs to evolve as the crisis, and our health response, also evolves.
"That doesn’t mean announcing a new package of support every time the health measures change.
"Instead, we’ve developed an economic toolkit, to give people and businesses the right support, at the right time, for their situation.
"If your business can open, the message is simple: we want to support you to bring people back to work.
"We’re doing that through the Job Support Scheme, which will directly support the wages of people who are in work giving businesses the option of keeping employees in a job on shorter hours rather than making them redundant.
"And for every employee brought back successfully from furlough, businesses can also claim the Jobs Retention Bonus.
"That’s the right approach for those businesses who can remain open.
"At the same time, as the virus surges in different parts of the country, the health restrictions may need to go further and ask some businesses to close.
"They will need further support.
"So to protect jobs, I’m announcing today that I’m expanding the Job Support Scheme.
"Where the coronavirus restrictions legally require business premises to close, in any region or nation of the UK, we will help pay employees’ wages.
"So, if your business does close their doors, and you cannot work for at least one week or more, your employer will pay you two thirds of your normal salary, up to £2,100 a month – and the UK government will cover the cost.
"The scheme will apply to all business premises legally required to close.
"That includes businesses told to operate on a collection only or delivery only basis.
"Unlike the Job Support Scheme for open businesses, all we’ll ask closed businesses to pay is the cost of Employer National Insurance and pension contributions.
"The Job Support Scheme – whether for open or closed businesses – will open on November 1st;
"Pay grants from early December;
"Remain open for six months;
"And we’ll review the scheme, in January.
"I’m announcing a second new policy today.
"If you’re a business in England, and have been legally required to close, we’ll also give you a cash grant that will never have to be repaid.
"And I’m making those grants more valuable than we’d previously planned.
"The smallest businesses, those with properties worth £15,000 or less, can now claim £1,300 per month;
"Medium sized businesses – with properties worth between £15,000 and £51,000 - can claim £2,000 per month;
"And larger businesses, worth £51,000 or more, can claim £3,000, all paid in two fortnightly instalments, supporting hundreds of thousands of businesses.
"The Scottish, Welsh and Northern Ireland administrations can decide whether to do something similar, and I’m guaranteeing an extra £1.3bn of funding to them today.
"Our Winter Economy Plan and the expanded Job Support Scheme give businesses, whether they are open, or required to close the flexibility to adjust and plan over the coming months, in the full certainty that even if we do need to ask businesses to close, they have some support.
"All part of our plan to protect the jobs and livelihoods of the British people."
The Chancellor explains the scheme in more detail:
Rishi Sunak (RS): Throughout this crisis my priority has always been to protect jobs. So today I'm announcing an expansion of our job support scheme specifically to protect those jobs of people who work in businesses that may be asked to close.
If that happens, those workers will receive two thirds of their wages for the time that they're unable to go to work. I hope that this provides reassurance and a safety net for people and businesses in advance of what may be a difficult winter.
Sam Coates (SC):
Have you estimated how much that's going to cost? Do you know how you’re going to pay for it?
RS: We obviously won't know the exact take up of a scheme like this, because as we enter an uncertain period, the exact scope of any restrictions that may be necessary is uncertain at this time. We obviously have all the costings for the previous schemes that we've done that are available, but it's right that we take action now to protect people's jobs, provide that reinsurance, if indeed their businesses are asked to close throughout the winter.
SC: The fact that you're asking and announcing this scheme today does seem to suggest that you are, as a government, going to ask some businesses to close, possibly in the hospitality sector.
Can you say anything about which businesses, how much or how long, for all of the millions of people who are hanging on government decisions on what's coming next?
RS: Well, obviously, the rise in cases and hospital admissions in certain parts of the country is a concern. It's right that the government considers a range of options to address that and considers all the evidence. But it's also right that they engage with local leaders and that's what is happening this afternoon and over the weekend. So those conversations can happen and collectively we can decide on the appropriate response.
SC: Now, the hospitality sector and pubs don't want to be shut unnecessarily. We're not going to end up in a situation where lots of places are being closed without need and without an exit strategy.
How can you make absolutely sure that under what we're told is the tier system that's coming, which can look like a bit of a blunt instrument?
RS: I think it's absolutely right that we consider all the evidence and have these conversations together and consider all of these decisions in the report. I mean, we know the impact, but as far as having not just on our economy, we want to make sure we protect children's education and people's health conditions, not just coronavirus, all of these things in the round that we need to talk about.
With regard to the hospitality industry or other businesses that may be asked to close, I’m also announcing today an increase in the generosity and frequency of business grants that will go to those businesses, up to £3,000 a month paid every fortnight, which will also help them if they find themselves in this unfortunate situation.
SC: Over the summer, you encourage people to go to pubs, back into restaurants with your eat out to help out scheme. Now, hospitality is being blamed for the second spike. Two weeks ago, you didn't look like want to do anything like this partial furlough which you've rebranded a extension of the job support scheme. Now you're having to do it.
Is there any sense in which the Treasury is guilty of a bit of wishful thinking and what's going wrong, why are you having to do these u-turns?
RS: Well, this is a very different scheme to what we've had before. This is not a universal approach, this is an expansion of the job support scheme, specifically for those people who are in businesses that will be formally or legally asked to close, and in that sense it's very different.
But I've always said that we will adapt and evolve our response as the situation on the health side adapts and evolve. That's what's happening. I think that's the pragmatic and the right thing to do to adapt to that, and I believe that the actions today demonstrate that approach.
SC: Final question. The Prime Minister has said nobody who does the right thing should lose out from coronavirus. Today, you're effectively announcing a pay cut.
What do you say to those people who get less money each month in their salary as a result of today's announcement?
RS: Well, throughout this entire crisis, we've tried to protect people's jobs and incomes to a considerable degree. That's what the furlough scheme did, It protected almost nine million jobs. That's what today's announcement will do, protect the jobs and income of people who happen to work in businesses that may be asked to shut down.
And with all the other measures we've made, whether it's changes to our welfare system, mortgage holidays, support for businesses, we've made sure that the most vulnerable in our society are the ones that have been protected the most and that's something that we will continue to do.
Further guidance on the scheme will be set out by HMRC in due course:
- This scheme will cover businesses that, as a result of restrictions set by one or more of the four governments in the UK, are legally required to close their premises. This includes businesses that are required to provide only delivery and collection services from their premises, or food and drink outdoors from their premises. To be eligible employees must be employed and an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 23 September
- Under the scheme, employees will need to be furloughed for a minimum of seven consecutive days at any given time and the payments to employers will be made monthly in arrears.
- The Government is now making this scheme more generous so that businesses receive up to £3,000 per month, rather than up to £1500 per three weeks, and they are eligible for payment sooner, after only two weeks of closure rather than three.
- Small businesses with a rateable value of or below £15,000 can now claim £1,300 per month; medium sized businesses with a rateable value between £15,000 and £51,000 can claim £2,000 per month; and larger businesses can claim £3,000.
- The Government is also extending the scheme to include businesses which have been forced to close on a national rather than a local basis
- In July we announced an unprecedented guarantee that the devolved administrations in Scotland, Wales and Northern Ireland would receive a minimum of £12.7 billion in additional resource funding this year.
- Today the UK government is uplifting that by £1.3 billion, to at least £14 billion. This means at least £7.2 billion for the Scottish Government, £4.4 billion for the Welsh Government and £2.4 billion for the Northern Ireland Executive, on top of their Spring Budget 20 funding.
- We will also continue to help local authorities. Those at the highest levels of incidence will continue to receive targeted funding based on population size to support test, trace and contain activities at this stage of the national Covid-19 response. This is on top of £3.7 billion in grants to address Covid-related pressures, and £300m for local authorities to develop outbreak plans, already allocated across England.
- The Government has previously committed £400m to support local authorities’ Test, Trace and Contain Activities in England:
- £300m has already been allocated for local authorities to develop local outbreak plans.
- The remaining £100m is being allocated to local authorities as ‘surge funding’ in areas of local restriction.
- £20m of this £100m has already been allocated based on population size, including to local authorities in Leicester, Lancashire, the North East, Merseyside, and the West Midlands.
- Broader Government support to local authorities in England due to Covid-19 includes:
- Over £3.7bn of un-ringfenced grant funding to help them respond to pressure across all their services.
- Over £1.1bn ringfenced to support social care providers, helping to tackle the spread of the virus.
- A down payment of £50m to set up and run the Test and Trace Support Payment - £500 for low-income workers who can’t work from home and are told to self-isolate – and we will fully fund the costs of this scheme, including £15m in discretionary funds
- We’re providing a further £30m to LAs improve compliance with and enforcement of non-pharmaceutical interventions (such as self-isolation and business closures) over the next four months, including through COVID Marshalls.