Covid-19 Impact Brief: Thursday, September 24
Each week, our Public Policy team will be reporting on the latest weekly news in the evolving situation. To view the previous week’s summary, please click here.
Chancellor, Rishi Sunak has announced Winter Economic Plan amid fears of a second Covid-19 wave
- The announcements came after the Treasury cancelled the Autumn budget for this year due to the uncertainty caused by the rise in Covid-19 cases.
- Sunak confirmed that the furlough scheme will end on 31 October and will instead be replaced by a Job Support Scheme from 1 November for 6 months. Under the scheme, the Government will subsidise the pay of employees who are working fewer than normal hours due to lower demand.
- It will apply to staff who can work at least a third of their usual hours and employers will pay staff for the hours they do work. For the hours employees can’t work, the Government and the employer will each cover one third of the lost pay. This would mean people will still see lower take-home pay – with the Treasury saying someone who works 33% of their hours would get 77% of their wages.
- The Job Support Scheme will be capped at £697.92 per month. All small and medium-sized firms are eligible – but large firms are only eligible if they can prove their turnover has been adversely affected by Covid-19.
- Businesses will not be able to issue redundancy notices to employees on the Job Support Scheme – and there will be restrictions on capital distributions to shareholders.
- The Chancellor said he is also extending the scheme for self-employment for 6 months on “similar terms” to the existing job support scheme. The Self-Employment Income Support Scheme extension will support viable traders who are facing reduced demand over the winter months, covering 20% of average monthly trading profits via a Government grant.
- The 5% rate of VAT will remain in place for hospitality and tourism until 31 March 2021 and won’t go back up to 20% in January.
- Businesses who deferred their VAT will no longer have to pay a lump sum at the end of March next year. They will have the option of splitting it into smaller, interest free payments over the course of 11 months.
- Business interruption loans will have their Government guarantee extended from six to ten years. And the extending deadline of all loan schemes will be pushed back until the end of 2020. A new successor loan guarantee programme will also be rolled out in January.
- Struggling firms will also be able to make interest-only repayments and anyone can apply to suspend repayments for up to six months. Sunak said no companies will see their credit ratings affected. The application deadline for all coronavirus loan schemes – including the future fund – has been extended to 30 November.
- Extra support has been announced to allow people to delay their income tax bill – but it will still need to be paid. The chancellor said that those with tax debt of up to £30,000 will be able to set up a payment plan over 12 months to January 2022.
- Sports minister Nigel Huddleston has confirmed outdoor and indoor exercise classes are exempt from the ‘rule of six’ and can continue to take place in larger numbers.
- A new NHS Covid-19 app has just launched for England.
- Welsh First Minister Mark Drakeford has announced further restrictions across Wales. From today, hospitality businesses will have to provide table service only and close at 10pm. Similarly, off-licenses and supermarkets will be required to stop selling alcohol at 10pm. Alongside these restrictions, the Drakeford announced a new £500 payment to support people on low incomes who are asked to self-isolate if they have Covid-19.
- The Northern Ireland Executive has outlined details of a £11.2m Engage programme aimed at addressing the impact of Covid-19 on children’s learning. The funding will enable all primary and post primary schools to provide additional support for pupils.
- Eight additional “Nightingale Courts” have been announced by the Lord Chancellor to tackle the impact of Covid-19 on the justice system. The Nightingale Courts will hear non-custodial crime cases, as well as civil, family and tribunals work. In total, this announcement brings the number of Nightingales to 17, resulting in 32 new court rooms.
Private sector update
- Cineworld has reported a £1.3bn loss ($1.6bn) for the six months up to June as Covid-19 restrictions kept its cinemas shut. The cinema giant said it had reopened 561 out of 778 sites as lockdown restrictions have eased around the world.
- The Recruitment and Employment Confederation (REC) has said more than 120,000 new job adverts were posted last week, the highest number since the economic lockdown. The total number of vacancies is now around 1.2 million. There has been an increase in adverts for school support jobs such as crossing patrols, childminders and teachers as more schools and workplaces reopen.
Ryanair has seen forward bookings collapse by 90% because of a lack of confidence among passengers.