With the government set to introduce localised Covid-19 lockdowns of varying severity, the job support scheme (JSS) is to be expanded to support businesses required to close their doors as a result of coronavirus restrictions
Reporter, Accountancy Daily, published by Croner-i Ltd
Later today, prime minister Boris Johnson is expected to announce a three-tier alert system of medium, high and very high risk, in the face of escalating numbers of infections in the north west, Midlands, north east England and central Scotland.
Tier one, the lowest level of concern, would see national restrictions such as the rule of six, a 10pm curfew on restaurants and pubs and existing rules on masks and social distancing.
The next level up is likely to include bans on home visits and indoor socialising with other households in bars or restaurants.
Under tier three restrictions, bars and pubs would be closed for business in the hardest hit areas.
The expanded JSS will offer grants to firms whose premises are legally required to shut for some period over winter as part of local or national restrictions to pay the wages of staff who cannot work. The government will support eligible businesses by paying two thirds of each employees’ salary (or 67%), up to a maximum of £2,100 a month.
Under the UK-wide scheme, employers will not be required to contribute towards wages and only asked to cover National Insurance contributions (NICs) and pension contributions.
It is estimated that around half of potential claims are likely not to incur employer NICs or auto-enrolment pension contributions and so face no employer contribution.
Businesses will only be eligible to claim the grant while they are subject to restrictions and employees must be off work for a minimum of seven consecutive days.
The scheme will begin on 1 November and will be available for six months, with a review point in January. In line with the rest of the JSS, payments to businesses will be made in arrears, via a HMRC claims service that will be available from early December.
Employees of firms that have been legally closed in the period before 1 November are eligible for the coronavirus job retention scheme (CJRS).
Cash grants for businesses required to close in local lockdowns also increased to up to £3,000 per month in to provide support with fixed costs. These grants will be linked to rateable values, with up to £3,000 per month payable every two weeks, compared to the up to £1,500 every three weeks which was available previously.
The Treasury said this could benefit hundreds of thousands of businesses, including restaurants, pubs, nightclubs, and bowling alleys.
Rishi Sunak, Chancellor of the Exchequer, said: ‘I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves.
‘The expansion of the JSS will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time.’
The JSS was first unveiled at the end of September to support low demand over the winter, as a replacement for furlough payments under the CJRS launched at the start of the pandemic.
It applies to employees working a minimum of 33% of their usual hours. For the remaining hours not worked, the government and the employer will pay one third each. This means employees working 33% of their hours will receive at least 77% of their pay.
The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
CBI head Carolyn Fairbairn said: ‘The steep rise in infections in some areas means new restrictions to curb numbers feel unavoidable.
‘The Chancellor’s more generous job support for those under strict restrictions should cushion the blow for the most affected and keep more people in work.
‘But many firms, including pubs and restaurants, will still be hugely disappointed if they have to close their doors again after doing so much to keep customers and staff safe.
‘In addition to financial support, continual transparency around decision-making is crucial. A consistent and open strategy for living with Covid-19 through the autumn and winter will help protect lives and livelihoods.’
Chris Sanger, EY’s head of tax policy, said that although it was not described in this way, the JSS expansion could be seen to be ‘Furlough 3.0’, following on from the Chancellor’s first iteration in March and Furlough 2.0 brought in from July, but noted a number of potential pitfalls.
Sanger said: ‘Whilst we may not have a Budget this Autumn, with all these incremental policy announcements the Chancellor may well end up delivering far more change in this half year than a Budget would normally deliver.
‘However, has he gone far enough by only supporting those that fall in the geographical boundaries of the local lockdown and those explicitly required to close?
‘The support for those businesses which are forced to shut as a result of the lockdown measures, such as bars and restaurants, is of course to be welcomed but the scheme fails to acknowledge and support businesses in the supply chain which support those closed businesses.
‘Those suppliers are now faced with the prospect of having their customers taken out of the supply chain, but aren’t themselves forced to shut and hence have no access to the benefits of the new scheme.
‘The economic impact of the local lockdowns permeates further than just the immediate area impacted. Many businesses just outside those areas affected are likely to be significantly impacted economically but will have no way of accessing the much needed support available to those that fall in the geographic areas.’