When Boris Johnson announced tighter restrictions across the country in an attempt to slow the spread of the virus, many workers were left wondering how this would impact their job security and concerns grew about how businesses would be affected.
In order to sustain the economy and minimise job losses across the country the government have rolled out a Winter Economy Plan which includes further measures to support businesses through the crisis and reduce the financial implications of the virus. Rishi Sunak’s plan aims to reduce job losses by giving business the financial backing to retain staff despite the potential lack of demand they may be facing as a result of the Covid-19 pandemic, including the extension and modification of current schemes as well as the introduction of new packages.
What Is The Winter Economy Plan?
The government announced the latest support packages to help businesses and their employees through the next six months and the country continues to battle the spread of coronavirus. The plan includes steps to reduce job losses across the country, as well as support for the self-employed and more flexible loan repayments for businesses. As the furlough scheme draws to a close the government’s plan is the next phase in protecting businesses through the potential loss of revenue and avoiding any further job losses, and will see SMEs provided with additional support to help them survive the winter months beyond the furlough scheme.
In order to allow businesses to continue operating beyond the furlough scheme, Rishi Sunak detailed the new measures which would be put in place to combat loss of revenue as a result of the coronavirus outbreak, with the new plans extending for the next six months. The Winter Economy Plan includes the new Job Support Scheme which will be put in place from November 1st to help businesses to retain staff if they are facing a decline in demand as a consequence of the pandemic. This will involve the government contributing to the wages of staff who have been given reduced hours, with a third of the lost hours being covered by the employer and a third being covered by the Job Support Scheme.
The Winter Economy Plan will also extend its support for the self-employed by continuing to offer grants to cover the loss of work throughout the next six months. A taxable grant will be made available to those who were previously eligible for the SEISS, with additional funds being provided to cover the months from February to April 2021. Businesses will also be given more time to make repayments on loans taken out at the beginning of the pandemic in order to help them to sustain their operations in the long-term and to protect jobs as a result of the new ‘Pay As You Grow’ scheme.
How Will This Affect My Business?
The Job Support Scheme is a great opportunity to retain staff even while you are experiencing a reduced workload as a company. You can reduce the hours of your staff while minimising their loss of income provided that the employee works 33% of their contracted hours. Any SME with a UK bank account and a UK PAYE system can take advantage of the scheme and larger businesses may also be eligible if they can demonstrate a drop in turnover since the Covid-19 outbreak.
Businesses who took out a Bounce Back Loan will be given extra flexibility on repayments, owing to the new ‘Pay As You Grow’ system. The loans have now been extended from six years to ten, reducing monthly repayments by almost half, and businesses will be offered six months of interest free payments as well as payment holidays.
Whilst these schemes have predominantly been put in place in order to prevent job losses, they also offer businesses an opportunity to operate throughout the next six months with minimal financial damage, and will ultimately save the future of hundreds of SMEs across the country. The schemes are available to all UK based SMEs, and it is important to gather as much information as possible in order to progress in a manner that suits your company and its financial situation.
There is a wealth of information available to businesses regarding the new Winter Economy Plan as well as guidance on how to claim through the various schemes and your responsibilities in each instance. You can find full details of the government’s new Winter Economy Plan here.
At The Financial Management Centre we have a wealth of experience in supporting businesses of all sizes and providing useful and relevant advance to anyone needing additional support in managing their finances. If you believe your business will be affected by the Winter Economy Plan and would like some guidance on which steps to take next, contact our professional and friendly team today by calling 0333 202 7198 or emailing [email protected] to receive impartial advice on the government’s latest plan and any other financial queries.