Businesses hail Rishi Sunak’s ‘hugely generous’ job support package
Pubs, bars and restaurants hailed Rishi Sunak's "hugely generous" changes to the furlough replacement scheme on Thursday, but opponents and experts asked why more was not done sooner to prevent thousands of people losing their jobs.
After weeks of sustained pressure, and with just days to go before the furlough scheme ends, the chancellor bowed to calls for bigger government contributions to wages.
Westminster will now pick up almost 70 per cent of workers’ wages for hours not worked, up from 33 per cent under previous plans.
Employers' minimum contributions will be cut from 33 per cent to 5 per cent, making it much easier for struggling businesses to retain staff.
That pleased no one more than the country's hospitality businesses which are being hit hard by renewed fears about rising case numbers - and an enforced 10pm closing time.
Pubs in areas under tier 2 restrictions had "felt like they had the worst of all worlds", with additional rules reducing trade further but without receiving additional support, said Tom Stainer, chief executive of the Campaign for Real Ale. "So these new financial support packages will be warmly welcomed by the beer and pubs sector."
Pubs and brewers will now have a much better chance of surviving, he said.
The chancellor also outlined grants of up to £2,100 per month for businesses under tier 2 restrictions which can remain open but are seeing a significant drop-off in trade.
Grants will be backdated to August for areas such as Greater Manchester that have already been under restrictions for some time, heading off criticism that the government has neglected the needs of much of the country with its support measures.
Kate Nicholls, chief executive of UKHospitality, which represents pubs, bars, hotels and restaurants across the country, said it was a "hugely generous package of support".
“The changes to the Job Support Scheme (JSS) will help to safeguard hundreds of thousands of jobs and the grant support will provide a crucial lifeline for businesses struggling with low footfall and ongoing costs.
"It is excellent that the grant has been backdated to when the restrictions began to bite."
The new measures will protect 2 million more people from redundancy than the previously announced Job Support Scheme, according to calculations by the New Economics Foundation.
The JSS had been widely criticised for making it cheaper to sack staff than to keep them on at reduced hours.
Yet, while the new measures are significantly more generous, they leave about 450,000 jobs unprotected and do nothing to help those already out of work due to delay in fixing flaws in the scheme, the NEF said.
NEF chief executive Mattiah Fahnbulleh welcomed the announcement but said further improvements were needed.
“Now the chancellor needs to address the other gaps in his plan. Full furlough for businesses that are being asked to shut down for months on end," Ms Fahnbulleh said. "Support for millions of excluded. And a minimum income guarantee to bolster support for many that have and will lose their jobs this winter.”
As currently designed, the scheme may advantage older workers at the expense of their younger colleagues, said Andrew Sanford, a partner at accountants Blick Rothenburg.
He pointed out that, while employers' contributions have decreased, they must still pay National Insurance and pensions.
“For businesses with no funds, redundancy and liquidation maybe the only option available,” he said. “Older workers may have more years of service and so redundancy costs may mean they are retained compared to a new joiner.
"Some additional funding for the under-25s in covering their employer’s national insurance would have been welcomed.”
Mr Sunak also doubled the value of upcoming grants for the self-employed from 20 per cent to 40 per cent of average profits, increasing their maximum value from £1,875 to £3,750.
IPSE, the representative body for self-employed workers, said there remain “deep structural problems” with the system.
Derek Cribb, chief executive of IPSE said: “A third of the self-employed – including sole directors of limited companies and the newly self-employed – are still completely excluded from SEISS, and the proportion is even higher in the hospitality sector.
"This is an enormous omission and it is deeply troubling that the government has not addressed this."
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