After mounting pressure from MPs, regional mayors and businesses, the Chancellor Rishi Sunak returned to the Commons to announce three further steps to support those living under Tier 2 conditions.
Mr Sunak told MPs he acknowledged the “frustration” of people living in Liverpool, Manchester and Lancashire – the areas of England now under the toughest virus restrictions – and said the government was listening to people’s concerns.
The previously announced Job Support Scheme has been changed so that the government now funds 62% of the wages for people unable to work, with employer contributions reduced. Instead of a minimum requirement of paying 55% of wages for a third of hours, as announced last month, employers will have to pay for a minimum of 20% of usual hours worked, and 5% of hours not worked.
This move, which is aimed at addressing the gap in support for businesses in tier two restrictions, such as London and Birmingham, is not explicitly tied to that status, and is available across the UK. It more than doubles the maximum payment to £1,541.75 a month. In the most generous case, the taxpayer will now go from funding 22% of wages to just under half.
The scheme will be open to all small businesses and larger businesses that can show an impact on revenues.
Firms in affected areas will also be eligible for cash grants of up to £2,100 a month. And the Chancellor confirmed that grants can be backdated to August to help in those areas that have had local lockdown measures since the summer.
In tier three areas – for those living under the highest level of alert – the government will cover the full cost of employers paying two-thirds of people’s salaries where they cannot work for a week or more.
One of the most significant measures today is the extra help for the self-employed. Mr Sunak announced that he would be increasing government contributions for the self-employed, with a doubling of income support from 20% to 40% of people’s income. The move will increase the maximum grant to £3,750. There has been some criticism that the self-employed have not had as much support as some other groups during the pandemic but My Sunak tried to counter that today but describing sole traders as the “dynamic entrepreneurial heart” of the UK economy.
It’s another big intervention from the Chancellor and one all IAB members need to be aware of to advise their clients through these difficult and ever-changing times.