Published: 14:10, 24 September 2020
| Updated: 14:11, 24 September 2020
Measures unveiled by Chancellor Rishi Sunak in his latest package of measures to support firms as he confirmed the furlough scheme would come to an end next month, have been given a cautious welcome by Kent's business leaders.
As restrictions were tightened again amid a rising number of coronavirus cases, the government has responded by extending support to firms in order to keep jobs.
The Jobs Support Scheme will replace the furlough scheme when it ends in October and continue for six months.
In addition, he has confirmed the extension of the VAT reduction for tourism and hospitality businesses from January until the end of March next year. It means firms in those sectors will continue to pay just 5% VAT before it is planned to be restored to the normal 20% rate.
Also, businesses who deferred their VAT will no longer have to pay a lump sum at the end of March next year. They will, instead, have the option of splitting it into smaller, interest free payments over the course of 11 months - benefitting up to half a million businesses, according to the Treasury.
Repayment terms for government-backed loans taken out over recent months will also be extended on a 'pay as you grow' basis - meaning loans can be paid back over 10 years rather than six; effectively slashing monthly repayments in half.
They can also suspend repayments or move to interest-only repayments, for up to six months if in "real trouble".
At the heart of the revised package of support is the Jobs Support Scheme.
Starting on November 1, it is designed to support viable jobs, will be open to all SMEs and bigger firms who can prove they have been hit hard by the pandemic.
To be eligible, employees must work a minimum of 33% of their regular hours. For the hours not worked, the government and employer will pay a third each.
It means an employee working 33% of their hours will receive a minimum of 77% of their regular wage.
By means of comparison, initially, the previous scheme allowed staff to be 'furloughed' with the government picking up 80% of their, capped, wages.
The scheme for the self-employed will be extended on "similar terms", the Chancellor said.
Alison Parmar, development manager of the FSB in Kent, said: "There are many measures to welcome here that will make a real difference. It’s particularly encouraging to see that all small businesses will be able to access the new job support scheme without facing excessive paperwork, with a guarantee of help for the next six months.
“News of the ‘Pay as You Grow’ approach will mean relief for hundreds of thousands of firms, giving them the confidence to invest and hire today rather than tomorrow, providing a crucial option to suspend repayments for six months. We called for an extension to the deadline for emergency finance facilities and that extension has rightly been delivered today. The assurance on credit ratings will be hugely welcomed by many worried small business owners.
“On the tax side, the greater space being promised on deferrals and the maintenance of the 5% VAT rate for hard hit sectors are much needed, promising to shore-up demand for firms that are especially struggling. The extended deadlines for deferrals of VAT and self-assessment tax bills will help avoid cliff-edges in the future.
“We look forward to more details on the successor to the self-employment income support scheme. It’s right to provide support to the self-employed equivalent to that offered to employees, and the scheme should be opened up to those excluded from the first round of support measures.
“We are concerned that the Chancellor had nothing to say today on support for those who were left out of the first round of support measures, not least the newly self-employed and company directors. The government urgently needs to come forward with an emergency relief package for these groups which have dutifully paid their taxes and deserve help too."
It was a view echoed by Faye Cook from the corporate and commercial team at Tunbridge Wells law firm Thomson Snell & Passmore: “Although the further help will undoubtedly be welcome news for some, other businesses, particularly those in the worst hit sectors, may argue that they do not go far enough.
"However, what is clear is that all businesses, however large or small, will have to continue to evolve and adapt during the uncertain months ahead. They will need to utilise all of the help that is available, as well as focus on their own internal processes and procedures to ensure that cash-flow is tightly controlled and managed.”
Catherine Daw, partner and head of employment at Brachers, which has offices in Maidstone and Canterbury, said: “The Chancellor’s Job Support Scheme shows the government’s ‘cautious optimism’ about the economy and how businesses will have to adapt over the next six months.
“The aim is to preserve viable jobs where there are lower demands over the winter months and this should be a relief to businesses under pressure. Employees covered by the scheme over the next six months, will need to work at least a third of their normal hours and be paid for these.
"A portion of the remainder of their pay will be shared between the employer and the government, and the employee will forfeit the remaining portion. The scheme covers SMEs, and larger businesses under strain due to Covid.
"Employees cannot be made redundant while covered by the scheme and we await the further guidance which is due to be issued shortly.”
The measures announced by the Chancellor will give business and the economy an important shot in the arm - British Chambers of Commerce
The director general of the British Chambers of Commerce, Adam Marshall said: “The measures announced by the Chancellor will give business and the economy an important shot in the arm. Chambers of commerce have consistently called for a new generation of support to help protect livelihoods and ease the cash pressures faced by firms as they head into a challenging and uncertain winter.
“The Chancellor has responded to our concerns with substantial steps that will help companies preserve jobs and navigate through the coming months. The new Jobs Support Scheme will help many companies hold on to valued, skilled employees. Businesses will be eager to see the detail and consider whether and how they will be able to use the scheme.
“The Chancellor has listened to our consistent calls for an extension of business lending schemes, more flexible repayment terms for loans, and tax forbearance measures. With almost 40% of our firms saying they have three months cash in reserve or less, this will lessen the immediate pressure and provide reassurance for many affected firms at a challenging time."