Coronavirus – The Winter Economy Plan

Key points from Rishi Sunak’s Winter Economy Plan

Chancellor Rishi Sunak announced a combination of futher measures to support Workers, Self-Employed and Businesses at 12pm (today) on Thursday 24th September 2020.

Rishi Sunak’s Opening Remarks

• Sunak says the UK is in a fundamentally different position to it was in March when coronavirus first spread.
• The chancellor says millions of people have moved off furlough and back to work as the economy reopens, but the resurgence of the virus and measures needed in response pose a threat to a fragile economic recovery.
• He says the “economy is now likely to undergo a more permanent economic adjustment”.

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 redundant.
• 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 around 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 announces “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 pay-outs.
• 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 says on current plans VAT will increase from 5% to 20% on 13 January.
• The cut had been made at the chancellor’s summer economic update.
• The chancellor says he is cancelling a planned increase in VAT, keeping a lower rate of VAT for hospitality and leisure firms until 31 March 2021.

Stay Safe.

Source: The Guardian