Coronavirus: Everything you need to know about the Treasury's job support scheme, loan extensions and VAT cuts

The  Staff Canteen

The Staff Canteen

Editor 24th September 2020

Rishi Sunak has unveiled his winter economy plan to the House of Commons, the Treasury's latest bid to  support UK jobs and businesses when the furlough scheme runs out at the end of October. 

In his address, the chancellor said no decision was harder than to end the furlough scheme, but it is "fundamentally wrong" to keep people in unviable jobs.

He said that the picture is different to what it was in March, as many businesses are now "operating safely and viably but they now face uncertainty and reduced demand over the winter months." 

'An important evolution in our approach'

  • The new 'Job Support Scheme' will allow businesses to keep employees in a role if their employer is able to employ and pay them for a third of their normal hours.
  • The support will be targeted: SMEs and medium businesses will be included by default, but larger firms will have to show that they have lost revenue throughout the crisis to apply.
  • Businesses will be allowed to claim from the Job Support Scheme in combination with the Job Retention Bonus, providing they keep their employees in work. 
  • The Job Support Scheme will last for six months from November 1st until May 2021.
  • Bounce back loans will become "pay as you grow", meaning repayments can now be extended over 10 years - with the possibility of suspending payments altogether for six months. 
  • The government guarantee on Coronavirus Business Interruption Loans (CBILS) has been extended by 10 years. 
  • The deadline on all loan programmes will be extended to the end of the year, and a new programme will be introduced in January 2021.
  • The £30bn of deferred VAT due for repayments by businesses will be pushed back to March 2021. Businesses and the self-employed will be allowed to spread repayments in installments, over 11 months.
  • The 5 percent VAT rate will be maintained until March 2021.

In his speech, the chancellor said that while people "are anxious and afraid and exhausted at the prospect of further restrictions on our economic and social freedoms," that "there are reasons to be optimistic," speaking of increased knowledge of how to treat patients with Covid, enough stocks of PPE to keep infections at bay, and the adaptability businesses have shown to become viable and safe again. 

While the new scheme will serve the same purpose as the furlough scheme - that is, to protect jobs - the circumstances require a different response, he said. 

"It is now clear as our Prime Minister and scientific advisers have said that for at least the next six months, the virus and restrictions are going to be a fact of our lives," promising an economy like no other before, with different sources of growth and jobs which will adapt "to the new normal." 

"Today's measures mark an important evolution in our approach. Our lives can no longer be put on hold. Since May we have taken steps to liberate our economy and society. We did these things because life means more than simply existing. We find hope and meaning through our friends and family, through our work and our community." 

Calling on the nation's cooperation, he said: "The responsibility for defeating coronavirus cannot be held by government alone - it is a collective responsibility shared by all because the cost is paid by all. We have so often spoken about this virus in terms of lives lost but the cost that our country is paying is 

Trade offs between health, education and employment must remain in mind in the coming weeks, he added. 

"It would be dishonest to say there is now some risk-free solution or that we can mandate behaviour to such an extent that we lose any sense of personal responsibility. What was true at the beginning of this crisis remains true now. It's on all of us and we must now learn to live with it and to live without fear."

£317bn

The announcement today replaced the Treasury's autumn budget, which ordinarily would cost tax payers an excess of £5bn. The pandemic has already cost the exchequer £39bn in support alone.  

But that’s just a fraction of the overall cost of the Covid crisis to the exchequer. Today a report published by the Institute for Government thinktank claiming that the government is likely to spend an excess of £317bn £192bn of which is accounted for in support including the furlough scheme, extra spending on public services and help for business, and the other £125bn in increased borrowing due to higher welfare spending and a drop in tax revenue. 

The news comes as restrictions on hospitality sweep the country, including a 10pm curfew on pubs, restaurants and bars in England, Scotland and Wales, a measure still under consideration in Northern Ireland. The Prime Minister has warned that restrictions could be made even tighter should the infection rate continue to rise at the current rate - which chief scientists claim is nearly doubling week-on-week. 

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The  Staff Canteen

The Staff Canteen

Editor 24th September 2020

Coronavirus: Everything you need to know about the Treasury's job support scheme, loan extensions and VAT cuts