Post-furlough business and job support unveiled by Chancellor

Published:  24 September, 2020

The furlough scheme is to be replaced with a Jobs Support Scheme which will see staff eligible to receive up to 77% of their salaries for the next six months, and businesses are being given more time to repay Coronavirus loans, Chancellor of the Exchequer Rishi Sunak has announced today (Thursday 24 September).

The Jobs Support Scheme will replace the furlough scheme, which ends on Saturday 31 October. The intention is to avoid mass redundancies, and the Chancellor said it was part of a wider "winter economy plan.”

The Scheme, which will kick off on Sunday 1 November is designed to offer firms the option of keeping employees on the payroll on shorter hours, instead of making them redundant. Employees will be required to must work a third of their usual hours, for which their employer will pay them as usual.  The government will provide a further third for the time they are not working. The new scheme is being aimed at all small and medium-sized firms as well as for large companies if their turnover has dropped by a third.

The self-employed will be also be offered a programme on similar terms.

Businesses that take advantage of the Job Support Scheme will also be allowed to access the £1,000 Jobs Retention Bonus, which pays out if a business keeps a member of staff, who was furloughed, on until 31 January 2021.

Official figures suggest that 12% of the UK workforce is still on furlough.

Those businesses that took up the government's loan scheme will  also be given more time to repay the money borrowed. “Loans can now be extended from six to ten years nearly halving the average monthly repayment”, the Chancellor observed. Coronavirus Business Interruption Loans will also be extended for up to 10 years.

 Meanwhile, businesses that delayed their VAT will no longer have to pay a lump sum at the end of March 2021. They can instead repay smaller interest free payments over the course of 11 months.

While many workshops that have taken use of the furlough scheme will have already taken their staff back on to deal with the MOT backlog, the existence of the Coronavirus Job Retention Scheme meant that millions of people have still not been working, which will have an impact on incoming work levels for garages.

Commenting on the new and revised support measures, IMI CEO Steve Nash said: “Rishi Sunak is in an unenviable position – there are many clamouring at his door for support. But his Job Support Scheme will certainly be welcomed by businesses in the automotive sector who face the enormous challenge of delivering a quality service whilst managing costs in the face of reduced turnover.  ONS data for earlier this month showed that around 2% of jobs in the sector have been made permanently redundant with potentially an additional 7,200 planned by the end of this month. And approximately 88,500 jobs remained on furlough earlier this month, 14% of jobs in the sector.
 
“The Chancellor’s new scheme should therefore provide some respite - after all, it’s crucial that individuals and families who don’t want to use public transport during this difficult time, but still need to get out for the school run, shopping and supporting family members can have access to professional services to stay safe on the roads.”

Mike Hawes, SMMT Chief Executive, observed: “The Chancellor’s Job Support Scheme is welcome and should provide temporary relief for the automotive sector, which has been so badly hit by the pandemic, as too will the flexibilities on the loan schemes and tax deferrals. We must make sure it’s more than just a short-term lifeline, however, and, like schemes elsewhere, ensure it supports jobs for the duration of the pandemic and recovery. Business remains fragile as we head into a winter of uncertainty, and a 2021 recovery is immensely challenging and far from guaranteed.”

NFDA Chief Executive Sue Robinson added: “It is important that we continue to monitor how the automotive sector performs in the last quarter of the year to consider any additional support the automotive industry may need going forward.”

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