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Business support during lockdown 2.0

A settled design going forward and support for the whole of the UK?

In what is becoming a regular event of mini Budget speeches, the chancellor has today announced a significant shift in the Treasury’s approach to the level of support for employees and businesses, as lockdown 2.0 starts. While the numerical difference in the amounts received by employees may not seem fundamental (furlough offers an extra 13% of usual wage compared to the JSS closed), the decision to accept that 80% is the ‘right’ level and to allow this for all businesses are major policy shifts from the chancellor’s position when discussing local lockdowns previously.

Eager to avoid a winter of discontent for the economy, the coronavirus job retention scheme (CJRS) will now run until the end of March 2021 with employees receiving 80% of their current salary for hours not worked as before. This will provide some comfort to employees, knowing that at the very least they can receive support up to the end of March.

In contrast, employers have been given full comfort only to January, knowing they only have to cover NICs and employee pension contributions for hours not worked. 

After January, the CJRS will continue but there is a level of uncertainty about what they will be required to pay towards the hours not worked, pending an HMT review. They will however be pleased to see details as to how to work out the amount to be claimed and confirmation that claims can be made from 8.00am on 11 November, with payments promised within six working days – helping to get much needed cash into businesses’ coffers. 

The chancellor also reverted to form on the self-employed, with the third self-employment income support scheme (SEISS) grant, covering November to January, again delivering 80% of average trading profits, up to a maximum of £7,500. The details of the fourth grant won’t be finalised until January.  
 

In lots of ways we are seeing a step back in time, or Groundhog Day, back to national lockdowns and back to the levels of government support offered in August. However, the support in August was offered against a more optimistic background. The current times seem to call for support to keep people in jobs, not to start bringing employees back to work. 

The support for the self-employed (SEISS) has by contrast gone further back in time, to the level of the original grant rather than the grant available from August. However, like the original grant, the problems are still there as to who qualifies and who doesn’t. 

There is still no or only limited relief for people operating through personal service companies and/or directors. Like the question of who qualifies for SEISS, this concern increases as the furlough schemes extends for longer.

In contrast to the, now effectively abandoned, job support scheme (JSS) for businesses forced to close, we are back to helping any business that chooses to furlough staff. However, the transparency inherent in the JSS, whereby employees can track whether claims have been made for them by their employer, has been absorbed into the extended CJRS.

We do now seem to have a clear idea of the tax support that comes with furlough, which will be appreciated by the Welsh and Scottish governments and by those areas in England that may find themselves back in tier 3 once the tier system resumes after the national lockdown. 

While the support announced today has given some certainty for businesses and employees, and hopefully avoided the need for more short term fixes, some may see the extension of the CJRS as paving the way for a longer national lockdown in England than the announced expiry date of 2 December.

Only time will tell, but for now some breathing space has been afforded over the Christmas period and beyond, but it will be far from merry. 
Issue: 1509
Categories: In brief
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