New financial support measures announced today
I thought it would be helpful to summarise the measures outlined by the Chancellor this morning, aimed at helping businesses affected by covid-19. This is especially relevant in areas such as the north east for businesses who have not been forced to close but have seen their revenues fall.
Job Support Scheme
Today we are increasing the eligibility and generosity of the Job Support Scheme OPEN, which is the scheme to support jobs where businesses have not been forced to close. More regions and businesses are moving into Tier 2 restrictions – meaning more businesses that remain OPEN, but experiencing a significant fall in revenues and demand. That is why we are rebalancing contributions between employer and government, to ensure that the government shoulders the burden of the cost as the virus remains with us for the near future.
The changes are summarised below:
Employer contribution: The employer will now have to pay just 5% of hours not worked – down from 33% previously, as well as NICs and pension costs. This is more generous to the employer than the furlough was in October. These changes will mean the maximum government contribution to employment costs will significantly increase from £697.92 to £1,541.75 per month. A typical furloughed employee in hospitality earns £1,000 a month.
Employee contribution: The employee must work at least 20% of their usual hours – down from 33% previously. This provides more flexibility to businesses facing reduced demand and will allow more employees to be claimed for. The employer will continue to pay for all hours worked by the employee.
Payment: For every hour not worked, the employee will be paid up to 67% of their usual salary. The government contribution to wages for hours not worked will therefore increase from 33% to 62% of wages, subject to a cap of £1,541.75 per month. In total, each employee below the cap will receive at least 73% of their reference salary (including hours worked).
Duration: The changes will begin on 1 November, for a period of six months, and with a review in January. Payments will be available from 8 December. The scheme is UK-wide. o Job Retention Bonus: Businesses will still be able to benefit from the £1,000 Job Retention Bonus. Taking the Job Support Scheme OPEN and the £1,000 Job Retention Bonus, the average furloughed worker will have around 95% of the total wage costs covered by the government if they are retained until February.
Eligibility: All small and medium sized businesses. Larger businesses that have experienced declines in revenue.
Support for the Self-Employed
We recently announced a grant extension for self-employed small businesses who used the existing SEISS scheme. The grant matched the average grant of the original Job Support Scheme, and represents 20% of three month earnings, for November to January.
Eligibility criteria will be refined to check whether the self-employed trader is still trading and is suffering lower revenues as a result of coronavirus.
Today, we are increasing the value of that grant from 20% to 40% of three month earnings, for November to January. This will mean the maximum available grant will increase from £1,875 to £3,750. And there will also be a further grant payment, covering February to April, as well. This increase reflects the increase in government contribution to the wages of those who are employed on the JSS, and ensures parity for those who are in self-employment.
Grants will be available for any self-employed person who has either been ordered to temporarily stop trading, or who is facing significantly reduced demand, regardless of whether they live in a Tier 1, 2 or 3 area. This will bring the total support for the self-employed during this crisis to £13.2 billion.
Support for the hospitality industry
I am really pleased the Chancellor has listened to the repeated lobbying efforts made by me and my colleagues to help out the businesses in our areas that are have not been forced to close, but have had their ability to trade restricted by the ongoing measures.
Today the Chancellor has announced additional funding through the Local Restrictions Support Scheme to provide grants to businesses in Tier 2 areas which are not forced to close, but which are facing reduced demand due to social distancing. These grants will be distributed to Local Authorities who will determine exactly which businesses are eligible for grant funding in their local areas, and how much to grant.
This grant is primarily designed for hospitality and leisure businesses affected by Tier 2 restrictions. Each council will receive an amount of funding based on the number on hospitality, leisure and accommodation businesses in that area.
These new grants will be equivalent to 70% of the grants given to legally closed businesses and will be backdated to the time when enhanced restrictions were introduced, so September for Northumberland.
For business properties with a rateable value of £15,000 or under, grants will be worth £934 per month. If the property is forced to close, they can receive £1,334 per month.
For business properties with a rateable value of between £15,000 and £51,000, grants will be worth £1,400 per month. If the property is forced to close, they can receive £2,000 per month.
For business properties with a rateable value of £51,000 or over, grants will be worth £2,100 per month. If the property is forced to close, they can receive £3,000 per month.
Local authorities will also receive discretionary funding to support businesses. Local authorities will also receive a 5% top-up amount to these grant amounts to cover other businesses that might be affected by the local restrictions, but which do not fit neatly into these hospitality or leisure categories, or which may not be in the business rates system.
Grants will be available from 1 November. Grants will be administered by local authorities, and will remain in place until April 2021, with a review point in January. This funding will apply in England only. If applied across England, this would provide over £250 million support for businesses each month. There are over 150,000 hospitality, hotel, B&B and leisure businesses in England which could benefit from this funding.
You can watch the Chnacellor's statement HERE