Winter Economy Plan Update
Chancellor Rishi Sunak delivered the Winter Economy Plan today, unveiling an emergency jobs scheme in response to the ongoing COVID-19 pandemic.
The Jobs Support Scheme will replace the furlough scheme which ends on 31 October and aims to support only viable jobs by topping up salaries in firms which cannot take employees back full-time.
The new scheme begins on 1 November and will run for six months. It is estimated to cost the government £300m a month.
How will it work?
- The government will subsidise the pay of employees who are working reduced hours due to lower demand – they must be able to work at least a third of their usual hours
- Employers must pay staff for the hours they do work
- For the hour’s employees can't work, the government and the employer will each cover one third of the lost pay. This means employees will get at least 77% of their normal salary
- The grant will be capped at £697.92 per month
- All small and medium sized businesses will be eligible for the scheme
- Larger business will be eligible if their turnover has fallen during the crisis
- It will be open to employers across the UK even if they have not previously used the furlough scheme
The Chancellor also announced an extension to repayment times for loans taken out under the various emergency government loan schemes announced in the Spring Budget.
- The new Pay as You Grow flexible repayment system means debt can be paid back over 10 years instead of the original six-year term
- This will also apply to small and medium-sized firms who borrowed under the Coronavirus Business Interruption Loan Scheme
- Application dates for the various schemes will also be extended
Notably for the hospitality and tourism sector, the Chancellor announced the extension of temporary cuts to VAT rates from 20% to 5% will remain in place until 31 March 2021. The cut applies to food and non-alcoholic drinks, accommodation, and admission to tourist attractions across the UK.
The measure aims to help protect 2.4 million jobs and support more than 150,000 businesses throughout the winter period.
In light of this week’s earlier announcement that pubs and restaurants will have to close at 10pm each night under new COVID-19 operating regulations, this measure was essential for the sector – some of the worst-hit by the pandemic and lockdown period – to offer some respite heading into the winter months and give them a hope to rebuild in future.
Thousands of jobs and businesses have been lost due to the devastating impact the pandemic has had on trade. Key trade associations urge the chancellor to work directly with them to develop further support which will help businesses and operators navigate themselves through these difficult times.
Stephen Owens, Managing Director of Pubs & Restaurants at Christie & Co comments, “Following the restrictions that were imposed on the sector earlier in the week, the Chancellor’s Winter Economy Plan is to be broadly welcomed. Clarity will be required on how the Jobs Support Scheme will work in practice but the extension of the temporary reduction in VAT to the end of March and other financial support measures is a step in the right direction. The sector will need to digest the detail and the plan may need to evolve to ensure that the hospitality sector can navigate itself through these challenging times.”
For more information visit the following key trade body websites.
UK Hospitality: https://www.ukhospitality.org.uk/page/Coronavirus
British Institute of Innkeeping (BII): https://www.bii.org/
Please get in touch if we can be of any support to your business at this time.
Stephen Owens FRICS MCIArb
Managing Director – Pubs & Restaurants