The Coronavirus Job Retention (Furlough) Scheme
The chancellor announced on 5th November a five-month extension of the furlough scheme to the end of March 2021 with employees receiving 80% of their current salary for hours not worked.
There is currently no employer contribution to wages for hours not worked. Employers will only be asked to cover National Insurance and employer pension contributions for hours not worked. For an average claim, this accounts for just 5% of total employment costs or £70 per employee per month. The CJRS extension will be reviewed in January to examine whether the economic circumstances are improving enough for employers to be asked to increase contributions.
The Jobs Retention Bonus (JRB) will not be paid in February and the government will redeploy a retention incentive at the appropriate time. The purpose of the JRB was to encourage employers to keep people in work until the end of January. However, as the CJRS is being extended to the end of March 2021, the policy intent of the JRB falls away.
Self-Employment Income Support Scheme
In addition, the Self-Employment Income Support Scheme (SEISS) grant will also increase from 55% to 80% of average trading profits up to £7,500, covering November to January. The furlough scheme was initially extended until 2 December. But the government is now going further so that support can be put in place for long enough to help businesses recover and get back on their feet
On top of this, the government has announced:
- cash grants of up to £3,000 per month for businesses which are closed worth more than £1 billion every month
- £1.1 billion is being given to Local Authorities, distributed on the basis of £20 per head, for one-off payments to enable them to support businesses more broadly
- plans to extend existing government-backed loan schemes and the Future Fund to the end of January, and an ability to top-up Bounce Back Loans
- an extension to the mortgage payment holiday for homeowners
- up to £500 million of funding for councils to support the local public health response.
More information policy announcements can be found here: economic support factsheet