Chancellor Announces new Furlough Scheme to Support Businesses Closed Due to Covid

Chancellor Rishi Sunak has announced that the government will pay two-thirds of workers’ wages for businesses forced to close their premises due to coronavirus restrictions, such as local or national lockdowns. The Chancellor unveiled the expansion to the Job Support Scheme on today and said he hoped the plan would be “reassurance and a safety net” for people across the UK as we head into a “difficult winter”.

He said any businesses legally required to close because of coronavirus measures would receive grants to cover staff wages – up to a maximum of £2,100 a month. Such grants, which launch under the scheme on 1 November, will be open for application only for employees who are unable to work for at least seven consecutive days. It will run for six months in total and will be subject to review in January.

Meanwhile, employers will not be expected to contribute to the wages, but will still be asked to cover national insurance and pension contributions.

The government is also increasing the cash grants to businesses in England shut in local lockdowns to help with fixed costs. These grants will be linked to rateable values, with up to £3,000 a month payable every two weeks.

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

This is an extension of the government’s previously announced Job Support Scheme, designed to support businesses that are facing low demand over the winter months.

Sunak said: “Throughout the crisis the driving force of our economic policy has not changed. I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves.

“The expansion of the Job Support Scheme will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time.”

The devolved administrations in Scotland, Wales and Northern Ireland will benefit from a £1.3b increase to their guaranteed funding for 2020-21, allowing them to continue their response to Covid-19, including through similar measures if they wish

UKHospitality welcomed the announcement but 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, warning that businesses facing restrictions such as curfew, compounded by diminished consumer confidence, must have a bespoke scheme, reiterating calls that the Chancellor’s Job Support Scheme must remove employer contributions to preserve hundreds of thousands of jobs across the country. At present the scheme does not go nearly far enough to help such businesses.

UKHospitality Chief Executive Kate Nicholls said: “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 JSS and recognises that this is an evolving situation. 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 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.”