The Government has today announced its Winter Economy Plan – the next phase of our planned economic response to coronavirus. There are reasons to be cautiously optimistic: thanks to our response in March, we have seen three consecutive month of economic growth, millions of people have moved off the furlough and back to work, and consumer spending is returning.
However, the resurgence of the virus threatens our recovery. Now it is clear we have to live with coronavirus for months to come, this means the economy cannot return to exactly as it looked in March and the economic rationale for the next phase of support must be different to that which came before.
Therefore, I am pleased that we have today announced this new package of measures focussing on dealing with the problems businesses face right now – supporting viable jobs through a time of depressed demand. These additional measures will help further protect jobs and businesses in my constituency and right across the country. They show that the Government does understand the challenges that people are facing. That the Coronavirus is impacting livelihoods, as well as lives, and the Government is doing what it can to protect both.
The main highlights of the plan are as follows:
- A new employment scheme – the 'Job Support Scheme.' Under this new scheme, a company will continue to pay its employee for time worked, but the burden of hours not worked will be shared equally between the employee, employer and government - a third each way. The Scheme is focused on viable jobs, so employees need to be working at least 33 percent of the time, and this percent will move up over time. The Scheme will open from 1st November, and run for six months until the end of April 2021. All businesses, not just those who used the furlough scheme, will be eligible. However larger businesses will only be eligible if their revenue has declined.
To ensure parity between employees and self-employed, the Government will also provide a further grant for self-employed small businesses who used the existing SEISS scheme. Eligibility criteria will be refined to check whether the self-employed trader is still viable, trading and is suffering lower revenues as a result of coronavirus. The grant will match the average grant of the Job Support Scheme, and represent 20% of three month earnings, for November to January
- Greater flexibility for repaying loans through a new ‘Pay As You Grow’ scheme. All borrowers will now have the option to repay their Bounce Back Loans over a longer time period by extending the term of BBLs to ten years – this will reduce their average monthly repayments by almost half. On an average £30,000 loan, this reduces the monthly payment from £532 to £309. Businesses will also be able to move to interest-only repayments for periods of up to six months – or to pause repayments entirely for the same period. It will have no impact on a business’s credit rating if they take up any of those options. The Government will also allow CBILS lenders to extend their loans to ten years as well, by extending the Government guarantee, providing more flexibility and support for businesses.
- More time for businesses to access a range of loan schemes. Over 1 million businesses across the United Kingdom have already benefitted from over £57 billion through the Government’s business loan schemes. However, the Government is now extending the deadline for new applications until the end of November for the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, and the Future Fund. Along with the Bounce Back Loans, this means all four loan schemes will now expire at the end of November. The Government has also promised to work with businesses and lenders to introduce a new loan guarantee scheme from January 2021.
- Extending the temporary VAT cut for tourism and hospitality. To continue supporting the 150,000 businesses and 2.4 million jobs in tourism and hospitality, the Government is extending the temporary 5 percent rate of VAT until the end of March 2021. This was originally due to end in January 2021, but the Government has recognised that the tourism and hospitality sector has been severely affected by coronavirus.
- Deferring repayments of VAT to support businesses during this period. Over half a million businesses have already benefitted from being able to defer quarter two 2020 VAT payments until March 2021 – worth over £30 billion to over half a million businesses. However, the Government is now launching a new scheme to allow businesses who want extra time to pay back the VAT they owe in smaller equal monthly payments, interest-free, until the end of March 2022. On average, this means turning a one-off £60,000 payment into 11 payments of less than £6,000.
- More time for self-assessment businesses to pay back. Around 1.5 million businesses who pay through income tax self-assessment benefitted from the Self-Assessment Tax Deferral, deferring an estimated £6 billion to be paid in July 2020 to the end of January 2021. To help them further, the Government is upgrading its Time To Pay service so that all 11 million self-assessment taxpayers will be able to create a 12-month payment arrangement for up to £30,000 each, and extended under the end of January 2022 – an 18 month deferral in total.
For more information, please see the following link: https://www.gov.uk/government/news/chancellor-outlines-winter-economy-p…;
