Chancellor boosts financial support for employees and employers

The Chancellor Rishi Sunak has announced changes to the Job Support Scheme and Self Employment Income Support Scheme from November in order to help those affected by Covid-19.

 

The Chancellor Rishi Sunak has announced changes to the financial support packed for businesses and the self employed from November.

Sunak said he would be increasing support through the existing Job Support and self-employed schemes, and expanding business grants to support companies in high-alert level areas.

The Job Support Scheme comes in on 1st November, replacing the furlough scheme. Originally it was aimed at supporting short time working. As first envisaged, employers would reduce their hours to 33% of their normal hours, but the employer and government would each to pay a third of the hours not worked.

According to the new announcement, employers can reduce hours to just 20% of normal hours and employer contributions to the unworked hours will be reduced to 5%, with the government footing the rest of the bill. The Government says that means that if someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer only £44.

Sunak also expanded business grants to cover businesses in particularly affected sectors in high-alert level areas and doubled grants under the extended Self Employment Income Support Scheme to cover 40% of previous earnings between November and January. The maximum SEISS grant will increase from £1,875 to £3,750 and there will be a new grant from February.

Employers will continue to receive the £1,000 Job Retention Bonus for retaining furloughed workers – who earn at least £520 a month on average – until the end of January and the extended scheme for business who legally have to close due to Covid-19 restrictions remains at 67% of earnings up to a maximum of £2,100 a month.

The Chancellor has also announced 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 tier 3 areas who aren’t legally required to close. These grants will be available retrospectively for areas who have already been subject to restrictions.

Tony Wilson, Director of the Institute for Employment Studies, welcomed the announcement, but said some sectors in tier 2 and 3 might still struggle to afford to pay workers even one day a week. He stated: “We estimate that at least half a million jobs were furloughed in hospitality and the arts in Tier 2 and 3 areas, and many of these employers may well struggle to bring workers back for the minimum one day a week required under the scheme.  If they can’t do so, or can’t afford to pay them for that time, then they may still have no choice but to lay workers off.  So we would urge the government to use its discretion to waive the hours requirement in the most disrupted sectors in higher-alert areas.”

Meanwhile, IPSE, the self employed campaign group, welcomed the doubling of the SEISS amount, but said there were still many deep, structural problems with support for self-employed people generally. CEO Derek Cribb said: A third of the self-employed – including sole directors of limited companies and the newly self-employed – are still completely excluded from SEISS (and the proportion is even higher in the hospitality sector). This is an enormous omission and it is deeply troubling that the government has not addressed this.

“The gaps in the support have already led to the biggest drop in the number of self-employed on record – over 250,000 since the beginning of the year. With large parts of the country locking down again, this is only set to worsen as many forgotten freelancers face financial devastation. Government must act now and open up SEISS or other targeted support to these groups.”



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