Chancellor announces extended salary support

Chancellor announces extended salary support

The chancellor Rishi Sunak has this afternoon (9 October) announced that from 1 November, employees working for businesses lawfully forced to close as a result of Covid-19 restrictions will get two-thirds of their wages paid for by the government.

The scheme will last for six months, with a review after a three-month interval in January, and wages will be paid up to a maximum of £2,100 per employee, per month.

This announcement has been made ahead of further lockdowns expected to be confirmed on Monday 12 October by the government.

Furthermore, businesses forced to close in England can also benefit from an increase in business grants – up to £3,000 per month paid fortnightly.

Under the scheme, employers will not be required to contribute towards wages and only asked to cover National Insurance and pension contributions, a very small proportion of overall employment costs.

In line with the rest of the Job Support Scheme, payments to businesses will be made in arrears, via a HMRC claims service that will be available from early December.

Employees of firms that have been legally closed in the period before 1 November are eligible for the Coronavirus Job Retention Scheme.

Businesses will only be eligible to claim the grant while they are subject to restrictions and employees must be off work for a minimum of seven consecutive days.

Devolved administrations in Wales, Scotland and Northern Ireland will also receive increased funding, so as to ease the process of introducing similar measures if they decide to.

“Today I’m announcing an expansion of our Job Support Scheme specifically to protect those jobs of people who are working in businesses that may be asked to close,” the chancellor said.

“If that happens, those workers will receive two-thirds of their wages for the time that they are unable to go to work.

“I hope that this provides reassurance and a safety net for people and businesses in advance of what may be a difficult winter.

“This is a very different scheme to what we’ve had before, this is not a universal approach, it’s an expansion of the Job Support Scheme, specifically for those people who are in businesses that will be formerly or legally asked to close.

“In that sense it’s very different – I’ve always said we will adapt and evolve our response as the situation on the health side adapts and evolves as it’s happening.

“I think that’s the pragmatic and the right thing to do.”

A more comprehensive package is needed

UKHospitality has welcomed the increase in grants for closed hospitality businesses, but has repeated its call for a ‘much more comprehensive package of support for the whole sector to cover rent and other overheads to ease the strain on businesses’.

“Paying two-thirds of wages for employees in lockdown is a welcome step and it is encouraging to see that the chancellor has introduced flexibility and a sector-specific approach into the Job Support Scheme and recognises that this is an evolving situation,” says the organisation’s chief executive Kate Nicholls.

“Support for nightclubs and other businesses left in limbo, still unable to reopen, is very welcome. It will help save jobs in a sector that would be sorely missed it were allowed to die.

“However, worryingly, it does nothing to address the issues faced by sector businesses operating well below capacity due to restrictions and consumers avoiding travel and struggling to keep their workforce employed.

“The curfew has been crippling for many hospitality businesses, with sales down around 30% even in areas of low infection.

“A more comprehensive support package for our businesses affected must follow swiftly if they are to survive the winter and avoid contributing to mass unemployment. If the government is serious about saving jobs, it needs to rethink the mandatory curfew in areas where Covid-19 rates are low.

“The need now is no less – possibly is even more – than the first lockdown, so a more comprehensive package of financial support is crucial.

“In addition to employment support that must include grants for businesses to cover losses on stock and other overheads, which are piling up. We have already seen some high-profile failures and the situation is becoming increasingly unsustainable.

“The financial support on offer must go further if tragic levels of closures and redundancies are to be averted.”