Rishi Sunak announces replacement jobs support scheme

UK Chancellor Rishi Sunak has unveiled a new Jobs Support Scheme that will replace the current furlough system, which is due to end in October. This initiative could help reduce the number of job losses in the retail sector, particularly in stores, by enabling companies to retain staff on shorter hours in situations where they have less demand and falling revenues.

In recent months, a number of major retailers have announced plans to cut significant numbers of jobs due to revenue losses and the consumer shift away from stores to online during the Covid-19 pandemic. These include M&S, TM Lewin, Boots, and WHSmith.

Under the new scheme, announced in a statement to Parliament today, the government and employers will together top up the salaries of workers who have been forced into part-time hours following the devastating economic impact of Covid-19 lockdown measures.

All SME companies are eligible for the package, which begins on 1 November, but larger firms must prove their turnover has fallen during the crisis.

Only employees that are working for at least a third of their normal hours will qualify, with the government paying up to a third of any hours not worked, up to a maximum of £697.92, while firms will cover an additional third. This new scheme will be in place for six months.

It differs from the current job retention scheme, referred to as furlough, where workers currently working no hours can have their wages subsidised.

Sunak explained: “The government will directly support the wages of people in work, giving businesses who face depressed demand the option of keeping employees in a job on shorter hours rather than making them redundant.”

Other announcements made by the Chancellor today included the temporary cut in VAT to 5% for the hospitality and tourism industry being extended until 31 March 2021 and the government guarantee on coronavirus business interruption loans being extended to 10 years.

This follows a range of measures introduced by Sunak in the summer budget back in July that were aimed at boosting employment rates after the damaging economic impact of Covid-19, which included GDP falling by a record 20% in April.

There has since been a recovery, but GDP remains far below February levels. And Prime Minister Boris Johnson announced fresh Covid-19 restrictions this week that are expected to remain in place for at least six months.