New furlough scheme to pay two thirds of wages in local lockdowns

The government will subside two thirds of employees’ salaries in businesses forced to close due to local lockdowns, the Chancellor has announced.

As an expansion of its Jobs Support Scheme, the government will grant eligible businesses 67% of each employees’ salary throughout the closure period, up to a maximum of £2,100 a month.

Under the scheme, employers will not be required to contribute towards wages and will only be asked to cover NICS and pension contributions.

Businesses will only be eligible to claim the grant while they are subject to restrictions and employees must be off work for a minimum of seven consecutive days.

Starting from 1 November, the scheme will be made available for businesses in across all four UK nations for six months, with a review point in January.

In line with the broader JSS, payments will be granted to businesses in arrears, via a HMRC claims service that will be available from early December.

In addition to the extension, the government is increasing cash grants to businesses – such as nightclubs and other areas of hospitality - forced to close in England.

Grants will be linked to rateable values with up to £3,000 per month payable every two weeks, compared to the up to £1,500 every three weeks which was available previously.

The devolved administrations in Scotland, Wales and Northern Ireland will receive a £1.3 billion increase to their guaranteed funding for 2020-21, allowing them to apply similar measures if they wish.

“Throughout the crisis the driving force of our economic policy has not changed,” said chancellor Rishi Sunak. “I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves.

“The expansion of the Job Support Scheme will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time.”

Responding to the measures, UK Hospitality CEO Kate Nicholls said: “Paying two-thirds of wages for employees in lockdown is a welcome step and it is encouraging to see that the Chancellor has introduced flexibility and a sector-specific approach into the JSS and recognises that this is an evolving situation. Support for nightclubs and other businesses left in limbo, still unable to reopen, is very welcome. It will help save jobs in a sector that would be sorely missed it were allowed to die.

“However, worryingly, it does nothing to address the issues faced by sector businesses operating well below capacity due to restrictions and consumers avoiding travel and struggling to keep their workforce employed.

“The curfew has been crippling for many hospitality businesses, with sales down around 30% even in areas of low infection. A more comprehensive support package for our businesses affected must follow swiftly if they are to survive the winter and avoid contributing to mass unemployment. If the Government is serious about saving jobs, it needs to rethink the mandatory curfew in areas where COVID rates are low.

“The need now is no less – possibly is even more – than the first lockdown, so a more comprehensive package of financial support is crucial. In addition to employment support that must include grants for businesses to cover losses on stock and other overheads, which are piling up. We have already seen some high-profile failures and the situation is becoming increasingly unsustainable. The financial support on offer must go further if tragic levels of closures and redundancies are to be averted.”