Thursday, 24 September 2020

A plan to support our economy this winter

Today, the Chancellor Rishi Sunak set out the next stage of the government's economic response to Coronavirus in the House of Commons. 

When we went into lockdown in March this year, the government announced a number of schemes to help support people's jobs and incomes as we worked to slow the spread of coronavirus. Most businesses had to close as we all stayed at home. 

As the economy has re-opened in recent months, the challenges we face have changed. The virus is still with us, and new restrictions will often mean reduced demand, particularly in the hospitality sector. 

Today, the government has set out a new package of measures to support our economy this winter. This includes: 

Coronavirus Job Support Scheme
The Coronavirus Job Retention (Furlough) Scheme helped to protect people's jobs and incomes during the lockdown, so that workers who couldn't work during the crisis continued to be paid. 

The new Job Support Scheme will support the wages of people who are in work, giving businesses who face reduced demand over the winter the option of keeping employees in a job on shorter hours, rather than making them redundant. 

The scheme aims to support viable jobs for the future, so employees must continue to work at least a third of their normal hours and be paid for that work by their employer. The government will then top-up people's wages, with a third of the pay they have lost from reduced hours being paid for by the government, and the other third being paid for by employees. In total, employees will receive at least 77% of their normal salary. 

The scheme will run from November to April. and all small and medium-sized businesses are eligible. Larger businesses can also apply, but only when their turnover has fallen. Workers employed as of yesterday are eligible, and any business can take part, even if they have not previously used the furlough scheme. 

Support for the self-employed
To support the self-employed throughout the winter, the existing Self-Employed Income Support Grant will be extended on similar terms and conditions to the new Job Support Scheme. 

Pay As You Grow
Earlier this year, the government introduced Bounce Back Loans to provide quick, first-year interest-free loans to businesses. Today, the government is providing greater flexibility on the repayment of these loans by introducing Pay As You Grow. 

This means that loans can be extended from six to ten years, nearly halving the average monthly repayments. Businesses which are struggling can also choose to make interest-only payments, and any businesses in trouble can suspend repayments completely for six months. 

Government-Backed Loan Deadline
The deadline to apply for any of the government-backed loans has been extended until the end of the year, and a new successor loan programme will begin in January. 

VAT deferral scheme
Businesses were given the option to defer their VAT payments earlier this year. These payments are due in one lump sum in March, but businesses will now be given the option to spread their VAT bill over 11 repayments, with no interest to pay. 

Self-assessment tax deferral
Self-assessed income taxpayers can also extend their outstanding tax bill over 12 months from January.

VAT cut extended
Earlier this year the government cut VAT for the hospitality and tourism sectors from 20% to 5%. To help protect jobs throughout the winter, the cut will be extended until 31st March next year. 

These are very welcome measures and will go a long way to help support jobs, incomes and businesses in Northumberland over the coming weeks and months. If you are a constituent and need support, please do not hesitate to get in touch with my office, or visit my Coronavirus website to find out more -