Furlough, which comes to an end in October will be replaced with the Job Support Scheme from 1 November.
Under the scheme, which will run for six months, the government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand and employers will continue to pay the wages of staff for the hours they work. For the hours not worked, the government and the employer will each pay one third of their equivalent salary.
Employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
The scheme aims to stop mass job cuts after the introduction of new government measures to tackle the upsurge in coronavirus cases.
The Job Support Scheme will be open to businesses across the UK even if they have not previously used the furlough scheme, with further guidance being published in due course.
The Chancellor announced support for self-employed individuals by extending the Self Employment Income Support Scheme Grant (SEISS). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus.
As part of the new package of support, the government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year.
Business who deferred their VAT bills will be given more time to pay back, with the option of paying smaller instalments through the New Payment Scheme.
There will be greater flexibility for firms repaying a Bounce Back Loan; measures include extending the length of the loan from six years to ten, interest-only periods of up to six months and payment holidays will also be available to businesses. These measures will further protect jobs by helping businesses recover from the pandemic.
The Coronavirus Business Interruption Loan Scheme will give lenders the ability to extend the length of loans from a maximum of six years to ten years to help businesses to repay the loan.
For more details on today’s announcements, please click here.
Marc Crothall, Chief Executive of the Scottish Tourism Alliance said;
“The measures announced by the Chancellor today fall some way short of what is urgently needed to rescue Scotland’s tourism industry from a perilous situation.
The Jobs Support Scheme will only help businesses which have sufficient demand to pay these minimum hours; the majority of tourism businesses simply will not be able to do so as their businesses are either closed due to legislation or restrictions. This continues to create pressure on the payroll at a time when consumer confidence and demand for the services which the tourism sector offers is at an all-time low, coupled with the increased restrictions in place. There is not enough work for people in our sector and employers cannot afford to pay staff when there is no work so we can still expect to see mass redundancies.
The impact of the extension of the current rate of VAT at 5% until March 2021 will have a marginal effect on our industry, given that so many businesses will now be forced to make redundancies and close their doors for good.
News of the loan repayment extension, Pay as you Grow, and the extended opportunity for businesses to continue to apply for loans as a last resort, with the knowledge of there being less pressure on repayment timelines will be welcomed by many but sadly, it just won’t go far enough to protect and save our industry from significant decline.
I know so many businesses within the tourism industry and supply chain were hopeful that today’s announcement would offer an immediate life-line, especially those businesses who have not been able to restart or have been significantly impacted by the loss of the international market.
The reality we must all face now is that within the coming days and weeks, businesses owners will lose their livelihoods, thousands will lose their income and the effects on the economy and people’s lives will be nothing short of devastating.”