Key points from Rishi Sunak’s winter economy plan – at a glance

Taken from The Guardian – to see the whole article, please go to: https://www.theguardian.com/politics/2020/sep/24/key-points-rishi-sunak-winter-economy-plan-covid-crisis

 Furlough scheme replacement

  • Sunak announced a new ‘jobs support scheme’ to subsidise the wages of people in work to replace the furlough scheme when it ends at the end of October.
  • Businesses will have the option of keeping employees in a job on shorter hours, rather than making them redundanct.
  • Workers must work a third of their usual hours, paid by their employer as normal.
  • For the time they are not working, the government will pay a third of their usual pay, and the employer will pay a third of their usual pay.
  • Including the pay for the hours they are working, the Treasury says this means workers will get 77% of their usual pay.
  • The scheme will be targeted at businesses that need it most – all small and medium-sized firms – but only for big companies if turnover has fallen by a third.
  • The scheme will run for six months starting in November.
  • Firms can claim both the jobs support scheme and the jobs retention bonus.
  • A grant for self-employed workers will be extended on similar terms.

 Business loans

  • Sunak announced ‘pay as you grow’ to help companies repay state-backed business loans.
  • Loans can be extended from six to 10 years, almost halving repayments. Interest-only payments can be made, and firms in ‘real trouble’ can suspend their payouts.
  • All of the government’s state-backed loan schemes will be extended until the end of 2020, and the government is starting work on a new guarantee loan programme to begin in January.
  • The chancellor will allow businesses to spread their VAT bills over 11 separate payments.

 Hospitality sector

  • Sunak said on current plans, VAT would increase from 5% to 20% on 13th
  • The cut had been made at the chancellor’s summer economic update.
  • The chancellor said he was cancelling a planned increase in VAT, keeping a lower rate of VAT for hospitality and leisure firms until 31st March 2021.