Job Support Scheme Announcement

24 September 2020
Job Support Scheme Announcement

In a speech to the House of Commons, Chancellor Rishi Sunak has announced a new scheme that is set to replace the Job Retention Scheme as we head into the winter months. 

It is to say the least unusual for a Chancellor to cancel one of the Government’s financial set-pieces of the year – in this case the Autumn Budget planned for November – but as Rishi Sunak explained to fellow MPs these are unprecedented times. Instead, he was in the House of Commons to set out the Government’s proposals for dealing with the expected outcome of the Prime Minister’s recent announcement that COVID-19 restrictions would have to be tightened and could be expected to last at least another six months.

Organisations were already anxious at the furlough scheme coming to an end and were wondering how they were going to be able to avoid huge numbers of redundancies as government support dried up and demand took a further hit from the new restrictions.

The Chancellor’s answer is a new scheme, the Job Support Scheme, which is opening on 1 November and is set to be in place for six months.

How does the Job Support Scheme work?

Under the Job Support Scheme, employees must work a minimum of 33 per cent of their hours and be in “viable” jobs. For the remaining hours not worked, the government and organisations will each pay one-third. This means, the Treasury said, that employees working 33 per cent of their hours will receive at least 77 per cent of their pay. 

Of this 77 per cent, the divide is therefore 55 per cent paid by the organisation and 22 per cent by the government. The 22 per cent Government contribution is however a maximum and, for someone working 50 per cent of their hours, the government’s contribution would fall to 17 per cent on a sliding scale.

The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.

Who is eligible for the Scheme? 

The scheme will be open to small and medium-sized firms across the UK even if they have not previously used the furlough scheme. However, only large businesses that can prove they have been adversely affected by the pandemic will be eligible to apply. 

Does this impact upon the Job Retention Bonus?

No. The new scheme is designed to sit alongside the Jobs Retention Bonus and could be worth over 60 per cent of average wages of workers who have been furloughed – and are kept on until the start of February 2021. Organisations can benefit from both schemes in order to help protect jobs, the Chancellor confirmed.

What have been the initial reactions to this?

With the head of the CBI and the TUC General Secretary both photographed outside Number 11 Downing Street with the Chancellor before his announcement, their initial support for his proposals is not perhaps surprising. For the CBI, Dame Carolyn Fairbairn said: ‘These bold steps from the Treasury will save hundreds of thousands of viable jobs this winter. Employers will apply the same spirit of creativity, seizing every opportunity to retrain and upskill their workers.’

TUC General Secretary Frances O’Grady agreed that the job scheme will provide a lifeline for many firms with a viable future beyond the pandemic. ‘A National Recovery Council should now be convened,’ she continued, ‘bringing together government, business and unions. We can use the winter months to plan an economic spring, with fair rewards for key workers and good new jobs in green industry.’

The full text of the Chancellor’s speech can be found here