Will the Chancellor’s expansion to the Job Support Scheme work?

Job Support Scheme - Temporary "Closed due to Covid-19" sign
Chancellor Rishi Sunak announces further measures to support businesses forced to close due to Coronavirus restrictions.

Rachel Meadows, head of proposition, pensions and savings at Broadstone, explains what the new Job Support Scheme measures mean for businesses of all sizes.

What is the Expansion to the Job Support Scheme?

Following the announcement of the Job Support Scheme (JSS), which focused strongly upon providing support only to jobs that remained ‘viable’, the Chancellor Rishi Sunak has announced further measures to support businesses that need to close due to Coronavirus restrictions over the coming weeks and months.

The announcement came following growing pressure from industry and regional leaders in the most impacted areas of the UK who are concerned about the impact of local restrictions and the likelihood of further measures to come. For businesses that need to close under Coronavirus restrictions, the terms of the JSS looked wholly inadequate to prevent significant job losses and business closures over the winter months.

What is the JSS?

The Job Support Scheme (JSS) was announced within the Chancellor’s Winter Economy Plan as a successor to the Furlough scheme, which is due to wind up at the end of October.

The JSS marked a shift in emphasis away from across the board support, moving to focused assistance for jobs that are viable. Essentially, the Scheme provides subsidy support for businesses that are facing uncertain and reduced demand in the face of Coronavirus winter restrictions, but that are nonetheless able to keep staff working on a part-time basis.

What does the Expansion involve?

Essentially, businesses that are required by law to close due to Coronavirus restrictions will have two thirds (or 67%) of their wage bill paid by the government. This expansion is only available to businesses in sectors that are specifically, formally and legally asked to close – unlike prior measures which have been more broadly based.

The scheme begins on 1st November, and is available for six months, and the Expansion covers the same period. The Chancellor has committed to review the support in January.

Grants covering wage bills will be paid up to a maximum of £2,100 per employee per month. Employees must be off work for a minimum of seven consecutive days to be eligible.

In addition, the Chancellor announced an increase in Business Grants, with up to £3,000 per month (paid fortnightly) available for businesses forced to close in England under local or national lockdowns. Originally this amount was capped at £1,500 every three weeks.

  • Small businesses with a rateable value of below £1,500 can now claim £1,300 per month
  • Medium-sized businesses with a rateable value between £15,000 and £51,000 can claim £2,000 per month
  • Larger businesses can claim £3,000 per month
This follows other specific support announced by the Scottish Government for businesses impacted by restrictions there.

Read more: Shutdown shocks local economies: UK businesses respond to Chancellor’s local lockdown and JSS extension plans

What about other costs of employment?

Like the main JSS scheme, the Expansion does not provide support for employer pension contribution costs or for employer National Insurance costs. This means that employers forced to close will still have to bear these costs for employees unable to work.

The grant solely covers 2/3 towards wage costs. Employers eligible for the Expansion to the JSS have no obligation however to contribute towards wage costs.

Can businesses eligible for the JSS Expansion still claim the Job Retention Bonus?

Yes, businesses using the JSS or the Expansion measures will still be entitled to claim the £1,000 Coronavirus Job Retention Bonus.

What if restrictions change?

Employers will only be eligible for the support grant whilst they are subject to closure restrictions. Payments will stop once restrictions are lifted.

For more information visit:
https://www.gov.uk/government/news/job-support-scheme-expanded-to-firms-required-to-close-due-to-covid-restrictions

Broadstone view

The extension to the Job Support Scheme recognises a need for significantly more support from the government for businesses that are facing the harsh realities of more coronavirus restrictions in the coming weeks and months. The idea of the Expansion is to try to ensure that more businesses survive the winter and, in theory, enable them to reopen quickly once restrictions are lifted.

For businesses that may operate across a multitude of regions, all potentially facing differing local restrictions, and therefore eligible for differing levels of government support under the JSS and its Expansion, operating and administering processes like payroll and pension contribution calculations are likely to prove complicated to say the least.

Whilst a welcome increase, this is still significantly less generous than the original furlough scheme, and for worried businesses this additional intervention adds weight to rumours of tougher trading restrictions to come. An already tricky winter is looking bleaker by the week for impacted industries.

Rachel Meadows is head of proposition, pensions and savings at Broadstone.

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