Sunak unveils Winter Economy Plan
Rishi Sunak has unveiled his Winter Economy Plan, which includes an emergency job support scheme to replace furlough.
Under the new scheme, the government will support businesses facing depressed demand by topping up workers’ wages, covering a maximum of two-thirds of their hours for the proceeding six months.
However, employees will have to work at least a third of their regular hours in order to qualify for the scheme.
Data collected by the Office for National Statistics shows that 12% of the UK’s workforce is on partial or full furlough leave.
The scheme is targeted at small and medium-sized firms (SMEs), but larger businesses are still able to apply if their turnover has fallen by third or more.
The chancellor also outlined the introduction of ‘pay as you grow’ state-backed business loans.
Loans can be extended from six to 10 years, interest-only payments can also be made, and firms experiencing significant difficulties will be allowed to suspend payments.
All government-backed loan schemes will be extended until the end of 2020, and a new guarantee loan programme is set to begin in January.
In addition, business will be permitted to spread their VAT bills over 11 separate payments.
Furthermore, Sunak outlined that a VAT cut for hospitality and tourism companies will be extended until 31 March 2021.
Sunak said: “I know people are anxious, and afraid, and exhausted, at the prospect of further restrictions on our economic and social freedoms.
“I share those feelings, but there are reasons to be cautiously optimistic.
“We are in a fundamentally different position than we were in March. And we now know much more about this virus…in economic terms, while our output remains well below where it was in February, we have seen three consecutive months of growth.
“And millions of people have moved off the furlough and back to work.
“But the resurgence of the virus, and the measures we need to take in response, pose a threat to this fragile economic recovery.
“So our task now is to move to the next stage of our economic plan, nurturing the recovery by protecting jobs through the difficult winter months.”
Sunak added: “The furlough was the right policy at the time we introduced it.
“It provided immediate, short-term protection for millions of jobs through a period of acute crisis.
“But as the economy reopens it is fundamentally wrong to hold people in jobs that only exist inside the furlough.
“We need to create new opportunities and allow the economy to move forward and that means supporting people to be in viable jobs which provide genuine security.”