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Rishi Sunak announces new Job Support Scheme to replace furlough

Written by Latifa Yedroudj on Friday, 25 September 2020. Posted in Politics, Analysis

The Job Support Scheme, which will run for six months from November 1, will top up wages of workers who have not been able to return to work due to the pandemic

Rishi Sunak announces new Job Support Scheme to replace furlough

The Job Support Scheme, which will run for six months from November 1, will top up wages of workers who have not been able to return to work due to the pandemic 

Chancellor Rishi Sunak has unveiled his Winter Economy Plan to prevent businesses from collapse and help Britain’s workforce amid tighter restrictions with a spike in coronavirus cases. The chancellor has revealed details of a Job Support Scheme that will replace furlough to help firms survive the pandemic. The government and firms will continue to top up wages of workers who have not been able to return to the workplace full time due to the coronavirus.  

Starting on November 1, the Job Support Scheme will run for six months and aims to top-up salaries in firms which are unable to take employees back full-time. To be eligible for the scheme, employees must work for at least one-third of their normal hours. For the hours not worked, the government and employer will each pay one-third of the remaining wages meaning the employee would get at least 77% of their pay. The Job Support Scheme is open to SMEs but large businesses are also eligible if they can prove their revenue has fallen because of coronavirus. The Jobs Support Scheme will only help those on the PAYE payroll. However, Mr Sunak said the new scheme would "support only viable jobs" - but he declined to comment on what defines that. "It is not for me to sit here and make pronouncements on every individual job," he said. "What I want to be able to do is to provide as much support as possible given the constraints we operate in. We obviously can't sustain the same level of things that we were doing at the beginning of this crisis." In addition to the new Job Support Scheme, the chancellor has also unveiled several measures to help the UK’s workforce battle through this difficult period. Self-employed workers have been given more time to pay their tax bill and extra grant help. Businesses have also been given extra time to pay loans for the Bounce Back Loan Scheme upto ten years and Coronavirus Business Interruption Loan Scheme which will be extended until the end of 2020.  

To minimise unemployment due to the pandemic, the UK government will also give firms £1,000 for every furloughed employee kept on until at least the end of January, £1,500 for every out-of-work 16-24 year-old given a ''high quality'' six-month work placement and £2,000 for every under-25 apprentice taken on until the end of January, or £1,500 for over-25s. Boris Johnson and the Chancellor have stressed the furlough scheme can't continue in its current form forever - where 80 per cent of people's wages are paid by the Government up to a cap of £2,500 a month. Mr Sunak said today: "The Government stands with the British people and British business. 

"It is now clear, as the PM and our scientific advisers have said, for at least the next six months, the virus and restrictions are going to be a fact of our lives.  

"Our economy is now likely to undergo a more permanent adjustment, the sources of our economic growth and the kinds of jobs we create will adapt and evolve to the new normal. Our plan needs to adapt and evolve." The package – also including VAT breaks for hospitality and tourism, which was welcome with open arms by the Confederation of British Industry saying it would “save hundreds of thousands of viable jobs this winter”. 

However, business leaders are urging the government to step up efforts and deliver long-term plans to ensure SMEs can survive the crisis. “As fears of a second wave become reality, businesses across the country are fighting for survival,” Chirag Shah, CEO, Nucleus Commercial Finance said. “As such, today’s announcement of an extension to both the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme is welcome news for business owners throughout the country, who are looking for access to fast and flexible finance now, more than ever before.  

 “SMEs are the backbone of our economy, and we hope these measures will provide British businesses with the support they need at this challenging time. But while this announcement provides immediate relief to small businesses, the Chancellor must also deliver long-term plans to ensure they can not only survive the Coronavirus crisis but thrive for years to come: this is where the alternative finance industry has a vital role to play.” 

Meanwhile, Janine Chamberlin, Director at LinkedIn, added: “The furlough scheme has been a lifeline for people all over the country, and today’s announcement will be a welcome relief to many. Leaders have been grappling with the prospect of having to make difficult decisions regarding the future of their businesses and workforce, specifically whether they can keep staff on through the winter months. LinkedIn research of 250+ UK C-level executives found that a quarter was likely to have to make redundancies when the furlough scheme came to an end. Those out of work are facing the toughest jobs market in a generation with LinkedIn data finding that job applications are three times more competitive than last year. To stand out to employers, highlighting skills has never been more important. To help people develop the skills that are needed for today’s in-demand roles, LinkedIn has opened up around 1,000 hours of training which is available to everyone for free.” 

"It would have been all too easy for the government to extend the furlough scheme, but we welcome Sunak's decision to adapt it as we head into the autumn and winter months,” Lee Biggins, founder and CEO of CV-Library, said. “The new Job Support Scheme will help to slowly bring professionals back to work; some of whom may have been away from the workplace for as long as six months. It will also provide some respite for workers who may be feeling nervous about their career prospects; while alleviating pressures on employers to make difficult decisions about their workforce.  

"Unfortunately, the second wave is well on its way and it's going to be a difficult period for the UK job market. Already, we're seeing that people who work in industries that have been hard hit are starting to look for opportunities in different sectors; and application rates have soared massively. While more job opportunities are popping up every day, competition is rife, especially as people have been panicking about job security. The new measures may well be delaying the inevitable of mass unemployment, but they will certainly be welcomed by workers and employers alike." 

Meanwhile, some business leaders advised the government to help firms make better use of technology to facilitate operations and enable growth in various sectors despite the outbreak. “The Chancellor reminded us that our economy will undergo a permanent adjustment because of the virus,” Gary Turner, managing director of Xero, said. “Sources of jobs and growth will evolve and adapt as a result. For small firms, technology will be critical to help them get, sell and operate online to adjust to changing customer patterns and to be ready for future disruption. The Chancellor has recognised that ‘we can’t save every job’. It is vital that the government does more to enable small firms and entrepreneurs to do what they do best, to grow and create jobs. Job growth will come from the small business economy, so we need to help these firms make better use of the right technology to find greater value, scale and resilience in the months ahead.” 

However, there have been rising concerns that the end of furlough will spell disaster for businesses, such as night clubs. The Institute for Fiscal Studies (IFS) said the end of furlough “likely to translate into sharply rising unemployment”. Mr Sunak said in his announcement: “I can’t save every business; I can’t save every job. No chancellor could.” 

It is important the government steps up efforts to provide support to SMEs who form the backbone of Britain’s economy. Businesses will now have to bear the brunt of economic turmoil during this difficult period as the pandemic continues to hit Britain.

About the Author

Latifa Yedroudj

Latifa Yedroudj

Latifa Yedroudj has joined the Elite team to fully immerse herself in the business side of journalism, a strong passion of hers cultivated from young having co-run her mother's start up business since she was 18. Her interests lie in a wide range of subjects, including start ups, business, travel, and anything entrepreneurial she can get her hands on. She has worked for some of the biggest names in journalism including The Guardian and The Mirror. Follow her on @latifayed on Twitter for her latest journo rants.

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