Chancellor announces Job Support Scheme and VAT cut extension

Chancellor of the Exchequer Rishi Sunak has outlined plans that will support workers on reduced hours, as well as an extension to the VAT cut for hospitality.

Speaking at the House of Commons today (24 September), Sunak revealed a number of new financial measures that will protect hundreds of thousands of jobs over the winter.

Replacing the furlough scheme, which concludes at the end of October, the new Job Support Scheme will start in November, lasting for six months.

To be eligible, employees must work for at least one-third of normal hours. For the hours not worked, the government and employer will pay one-third each of the remaining wages, meaning the employee would get at least 77% of their pay.

The payment will be based on the employee’s normal salary, with the government share capped at £697.92 per month.

The Chancellor also announced that the cut in VAT to 5% for the hospitality and tourism sector will be extended until 31 March 2021, and businesses will have more time to pay back government loans.

Commenting on the announcement, UKHospitality chief executive Kate Nicholls said: “The announcement of further restrictions yesterday was a significant hammer blow that will inevitably depress trading. It was crucial that the Chancellor delivered support today that specifically targeted the hospitality sector which has been hit harder than any.

“The announcement of flexible employee support is a move in the right direction, but hospitality needs more targeted efforts to support jobs.

“Almost one million people in our sector are still on furlough. We need the government to go further in hospitality, recognising the greater restrictions imposed upon us, and pick up the full cost of unworked hours.

“This would be a relatively low cost for huge reward for our workforce. Full support to sustain people in their jobs during what could be a pretty bleak winter for hospitality would be a great step forward.

“Looking ahead, the extension of the VAT cut was absolutely critical. UKHospitality had pushed hard for it, so it is great to see the government taking note of our major concerns about recovery into 2021, though this must be extended further. The announcement of longer tax deferrals and the option of longer loan repayments should deliver some much-needed breathing room for employers.

“Things were looking grim for our sector yesterday and we were desperately hoping for some good news. The Chancellor has given us some reason to be positive again, but we urge him to engage with the trade on specific measures to keep people in work.

“While some of these measures announced today will give businesses a future to shoot for, and hope that they can begin to rebuild, we are still not out of the woods.”

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