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Summary
- The new jobs support scheme to replace the furlough scheme
- Shall start on 1 November 2020 and will last for a period of six months
- Scheme applicable to only viable jobs and open to all small and medium sized businesses
- Time period for loan repayments extended to ten years, from six years earlier, for businesses who borrowed funds under the bounce back scheme
A new jobs support scheme was unveiled by the UK Treasury on 24 September 2020 by Rishi Sunak, the chancellor of the exchequer. It will begin from 1 November 2020 and will run for a period of six months across the country. The furlough scheme would be ending on 31 October 2020, which has been supporting millions of jobs across industries.
The existing scheme providing government funding to self-employed people was also extended by the chancellor on similar terms as the jobs support scheme.
Together with the other ongoing job protection schemes such as the kickstart scheme, retention bonus, and trainings, the UK government remains committed to safeguard millions of jobs, said Sunak in his winter economy plan speech.
Three principals of the new jobs scheme
The jobs support scheme would be based on three main principals – namely to secure viable jobs, provide targeted help to firms who require it the most, and assist all businesses, even if they had not applied for the furlough scheme earlier.
To ensure the first principal of supporting viable jobs, the condition is that the staff should be working for at least 1/3rd of their normal hours and should be drawing salaries accordingly paid by their employers. Government and employers will collectively bear the cost of another one-third of the lost pay of their staff.
To provide targeted support, government’s eligibility condition is that all small and medium sized businesses can avail the scheme. However, large businesses have to prove that their turnover has dropped during the coronavirus pandemic period to access the scheme.
The jobs support scheme is estimated to cost the British exchequer a sum of £300 million every month.
Pay As You Grow scheme
Additionally, the winter economy plan has extended help to businesses through the Pay As You Grow scheme. Under the scheme, firms are being allowed more time to repay their loans. Money borrowed under the bounce back program of the government can now be paid over an extended period of ten years, up from the earlier six-year term.
The business loan repayment period is also extended for the coronavirus loan scheme for small and medium businesses.
The Confederation of British Industries (CBI) has applauded the Sunak’s plan. Dame Carolyn Fairbairn, director-general, CBI said that the plan would help preserve jobs and skills, thereby ensuring a faster economic recovery.
Further, the government has also extended the timeline for the temporary VAT (value added tax) cut from 20 to 5 per cent on tourism and hospitality businesses from January to March 2021, bringing in a sigh of relief to these sectors. The Food and Drink Federation said that while it was a laudable step, but the sector had been deeply impacted due to the renewed restrictions with the coming of a second Covid-19 wave in the country. The federation added that only the next few weeks would decide if the sector required any extra financial assistance or not.
