Chancellor Rishi Sunak has just announced parts of his ‘Winter Economy Plan.’
We’ve broken it down below so you can see what it means and also what questions it has presented.
We’ll keep updating this page and as more information (and clarification) comes through.
The headlines:
- The Chancellor has cancelled the budget.
- SEISS Extension: The Self-Employment Income Support Scheme extension will support viable traders who are facing reduced demand over the winter months. The scheme will last for 6 months from November 2020 to April 2021, in the form of two taxable grants. It differs from the previous SEISS grants in the following ways:
- The first grant will cover 20% of average monthly trading profits and will be capped at £1,875 in total.
- The grant will be limited to self-employed individuals who are currently eligible for the SEISS and are actively continuing to trade. What this means exactly will be key – but it will certainly mean less people are eligible for the grant.
- CJRS Extension: From 01 November 2020, for the next six months, the Job Support Scheme will protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19. This is a new wage subsidy scheme, which is less generous than the previous scheme.
- It will apply to all small and medium firms, but large firms are only eligible if their turnover has fallen in the pandemic.
- To be eligible employees work a minimum of 33% of their hours. For the remaining hours not worked, the government and employer pay 1/3 wages each. So employees working 33% of their hours, will receive at last 77% of their pay.
- More than one million businesses which have borrowed under the Bounce Back Loan Scheme will be offered the choice of more time and greater flexibility for their repayments.
- The government has extended the 15% VAT cut for the tourism and hospitality sectors to end of March 2021.
The Association of Independent Professionals and the Self Employed have said
“The support for the self-employed announced today is woefully inadequate. Although it is right for the Chancellor to extend SEISS, the support announced today still excludes one in three self-employed people.
“Limited company freelancers and the newly self-employed almost entirely missed out on support in the last lockdown and have faced bleak months of financial devastation. Now they face a dark winter ahead unless the government does more for them.
“Based on the drastic financial hit self-employed people took in the last lockdown, the new 20 per cent cap on support is likely to be nowhere near enough. As well as plugging the gaping gaps in support, government must follow the situation closely and be ready to raise the amount of support SEISS offers if needed.
“The self-employed sector has already seen a record drop in the first half of 2020 because of the unnecessarily large gaps in government support. The self-employed are vital for the economy and will be essential for economic recovery, but to play their part, they must get the support they need now. Government must do better for them.”
Key questions:
- What about the Excluded who have fallen through the gaps thus far? The Chancellor provided no information and no indication that measures would be put in place to protect these people.
- What does ‘actively continuing to trade’ mean? How much do traders need to have earned and how recently?
- What are ‘viable jobs’?
- Why are the self-employed being supported at only 20%? Why are the creative entrepreneurs who drive the economy valued less than PAYE workers in businesses?
Reaction
DCMS Committee Chair Julian Knight MP said:
“We welcome this economy-wide intervention from the Chancellor. However, it still leaves many hundreds of thousands of workers in events, arts and cultural parts of the economy with a grim future.
“The truth is, three times as many people in these sectors are currently on furlough than the national average, which suggests that the Job Support Scheme may not be able to stop unprecedented redundancies and many organisations from facing extinction.”
Jon Morgan, director of the Theatres Trust said:
“The Chancellor’s announcement today of the new Jobs Support Scheme will provide some respite for those theatres who are able to find ways of opening their buildings and of putting on work. For some theatres, this scheme will help them survive as it means they are no longer facing a cliff edge in their finances when the furlough scheme ends.
“But sadly it will not benefit most theatres and we fear that it will not be enough to stem the flow of redundancies across the sector nor ultimately to protect the fabric of our cultural landscape. Following six months without their main source of income, theatre reserves are already gravely depleted. With no way of reopening safely and viably on the horizon for many theatres, the future of the sector is still very much in jeopardy
“Theatres Trust welcomes the Chancellor’s announcement that VAT on goods and services in the tourism and hospitality sectors will be held at 5 per cent until the end of March. The extension of support for the self-employed, which make up 70 per cent of the theatre sector’s workforce, is also welcome, although we hope the new scheme will plug the gaps in the previous provision.”
Incorporated Society of Musicians‘ chief executive, Deborah Annetts, said:
“While we welcome much of today’s announcement from the Chancellor which will help our venues many of which are on a cliff edge, it is a devastating blow for the thousands of self-employed musicians who have had no income since March and still cannot return to work while venues remain closed. The UK music industry is a hotbed of world-leading talent which makes a huge contribution to our economy and global influence, so it is vital that freelancers are not forgotten and measures are put in place to help them until they can work again.
“Many musicians have already fallen through the gaps in the Self Employment Income Support Scheme and will continue to be excluded under the new measures. In addition, reducing support down to just 20 per cent of average monthly trading profits will not provide an adequate safety net for our members when they are unable to generate any income at all.
“The government must deliver on its pledge to ensure there is parity between employees and the self-employed by maintaining the existing level of support provided by the SEISS and expanding the eligibility criteria. These are dynamic entrepreneurs who will be back on their feet as soon as the sector can reopen, so any support measures need only last until the necessary safety precautions are eased.”
Peter Heath, Managing Director of Plasa, and co-founder of #WeMakeEvents:
“The live events industry welcomes the announcement of Sunak’s new job support scheme, which will provide some form of relief for companies in the sector. Yet, with the increased restrictions introduced by Government earlier this week, it’s looking unlikely that the sector will be able to return to work in a way that is financially viable over the next six months. There’s simply no work to return to, with demand drying up in line with social distancing measures.
“As a result, the majority of businesses in our sector will not be able to generate sufficient revenue to support their contribution towards employees’ salaries, nor will they be able to contract the huge self-employed community the events industry has become so dependent upon. This is why the #WeMakeEvents campaign will continue to highlight the plight of those affected until either government provides the requisite support or provides clarity on how current initiatives can benefit live events workers.”
Statement from SOLT
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