Explaining the New Extended New Job Support Scheme
Just when we thought the furlough scheme was ending and being replaced with an inferior alternative, Chancellor Rishi Sunak has upped the stakes.
In this video, how the latest version of the Job Support Scheme will work.
We’ve just heard from Chancellor Rishi Sunak, increasing support for struggling businesses and workers in what I guess we’re calling the New Extended New Job Support Scheme?
There’s an update in this video too for self-employed workers, who will be getting more than before.
We’re talking about the Job Support Scheme – it’s the replacement for the Coronavirus Jobs Retention Scheme (furlough), which ends on 31st October 2020.
The new scheme comes into force on 1st November.
The changes announced today mean that employers will pay less and staff can work fewer hours to qualify. There’s more support from the government too.
When the new Job Support Scheme was introduced as part of Sunak’s Winter Economic Plan, it was designed to pay 55% of wages for people working a third of their regular hours.
Now, the update means the scheme will pay 62% of the wages for hours not worked, more than doubling the minimum payment to reach £1,541.75 a month. You only need to work 20% of your regular hours – so one day a week – to qualify.
Government funding for the scheme goes from 22% to almost 50%. The employer contribution for hours not worked falls to 5%.
As before, the scheme is open to all small businesses, and also for larger businesses who can demonstrate the economic impact of Covid-19 – those with reduced revenues.
If someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer only £44.
Remaining unchanged in today’s announcement is the £1,000 Job Retention Bonus.
The Job Support Scheme Closed for businesses legally required to close remains unchanged.
For the self-employed, the update means profits covered by the two next self-employed grants (November to January and then February to April) rise from 20% to 40%. The maximum self-employed grant increases from £1,875 to £3,750.
And then there is additional funding for businesses in Tier 2 lockdown areas.
Businesses in the hospitality, accommodation and leisure sectors in Tier 2, high alert level areas, will be able to apply for cash grants of up to £2,100 a month, with these grants available retrospectively.
These grants are in addition to the additional business support for Local Authorities moving into Tier 3, very high alert areas.
As before, these grants are for businesses in English local authority areas, with devolved nations receiving equivalent funding under the Barnett Formula, and then deciding how to best deploy that money.
These changes make an already complex system of government financial support even more complex.
I worry that businesses will struggle to understand their eligibility for the various schemes, leading to either mistakes with their claims (and then repayments or fines), or failing to claim support at all.