Industry welcomes Jobs Support Scheme

Business groups and trade organisations have welcomed chancellor Rishi Sunak’s plans to continue government support for companies and workers impacted by COVID-19.

Jobs Support Scheme

Speaking in Parliament on September 24, 2020, the chancellor outlined a series of measures including a new Jobs Support Scheme to protect workers resuming their jobs in a part-time capacity and help for businesses in repaying government-backed loans.

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Sunak’s announcement follows PM Boris Johnson’s address to the nation on September 22 which outlined measures to combat the spread of the COVID-19 over the winter whilst growing the economy.

“The resurgence of the virus, and the measures we need to take in response, pose a threat to this fragile economic recovery,” Sunak told Parliament. “So, our task now is to move to the next stage of our economic plan, nurturing the recovery by protecting jobs through the difficult winter months.”

To this end, employers will be able to take advantage of a new Jobs Support Scheme from November 1 in which government will directly support viable jobs in businesses who are facing lower demand over the winter months due to coronavirus.

Under the six-month scheme, the government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand.

According to the Treasury, employers will continue to pay the wages of staff for the hours they work – but for the hours not worked, the government and the employer will each pay one third of their equivalent salary. Employees must work at least 33 per cent of their usual hours and the level of grant will be calculated based on employee’s usual salary, which has been capped at £697.92 per month.

The Jobs Support Scheme is open to businesses that have not used the furlough scheme and all small and medium sized businesses eligible to join it.

“Employers retaining furloughed staff on shorter hours can claim both the Jobs Support Scheme and the Jobs Retention Bonus,” Sunak said.

Companies that took advantage of Bounce Back Loans are being given more time and greater flexibility to repay their loans with the introduction of Pay As You Grow that extends repayments from six to ten years.

“I am also changing the terms of our other loan schemes, Sunak said. “More than 60,000 Small and Medium sized businesses have now taken out Coronavirus Business Interruption Loans.

“To help them, I plan to extend the government guarantee on these loans for up to ten years, making it easier for lenders to give people more time to repay. I am also extending the deadline of all our loan schemes to the end of the year. And we are starting work on a new, successor loan programme, set to begin in January.”

Commenting on yesterday’s announcement, Mike Hawes, chief executive of automotive trade body SMMT, said: “The chancellor’s Job Support Scheme is welcome and should provide temporary relief for the automotive sector, which has been so badly hit by the pandemic, as too will the flexibilities on the loan schemes and tax deferrals.

“We must make sure it’s more than just a short-term lifeline, however, and, like schemes elsewhere, ensure it supports jobs for the duration of the pandemic and recovery.”

Sounding a note of caution, Stephen Phipson, chief executive of engineering employers organisation Make UK said: “I warmly congratulate the chancellor for taking decisive action that will help avoid the significant redundancies we were facing had there been a cliff edge end to government support.

“Building on this, we must also recognise that there are some sectors of manufacturing where there is still not enough demand to even drive part time work. These are viable, often world leading firms, facing a sustained but temporary absence of demand. The aerospace and automotive sectors in particular, along with their supply chains, are leading edge high skill areas which will be the growth sectors of the future.”

Reaction round-up

“The impact of the sharp and sustained fall in demand for aviation threatens the future of many businesses. The Jobs Support Scheme announced today will help minimise the damage and help companies retain valuable skills and experience. The expected slow recovery in the worst affected sectors means more support will be required.”
Paul Everitt, ADS chief executive

“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. Wage support, tax deferrals and help for the self-employed will reduce the scarring effect of unnecessary job losses as the UK tackles the virus.”
Dame Carolyn Fairbairn, CBI director-general

“We welcome that the chancellor is ensuring that decisions to protect public health are informed by the need to protect the economy, people’s jobs and prospects for young people in our schools and workplaces.”
Mike Cherry OBE, Federation of Small Businesses national chair