Three-tier lockdown and financial support for businesses

Claire Ralph
Policy Manager | Business West
26th October 2020

This past month has seen Business West working hard in raising concerns with Treasury officials about the flaws of the Job Support Scheme (JSS) and the lack of generosity towards the self-employed. That being so, we are pleased that the Chancellor yesterday increased the generosity of the JSS and the Self Employed Income Support Scheme (SEISS).

Whilst these announcements are welcome and reflect our concerns about the precipitous fall off in help for struggling firms going into winter, gaps remain and support remains lower than in the summer when the virus was in abeyance and the economy was re-opening. 

The most significant change for businesses in the South West is the relaxations to JSS. The scheme starts in a week’s time (1 November), but the Government has realised that many businesses couldn’t afford to make use of the scheme to retain staff, given they were required to pay 33% of staff salaries for the hours not worked. This employer contribution has been cut to just 5%, meaning that the cost of retaining workers who have less work to do becomes more modest. The take home incomes remain as previously announced, with the Government footing most of the cost. 

Another change to JSS is a reduction in the proportion of contractual hours an employee has to work to be eligible, from 33% down to 20%. This helps businesses use the scheme where demand for their goods and services is lower than normal. But for businesses that cannot operate at all (but whose premises are not mandatorily closed under local or national lockdown restrictions) because of social distancing requirements (e.g. the events sector) the JSS remains unusable as the employers have no work for their staff.

All areas of the South West remain in Tier 1 and are therefore not eligible for new business rates grants for hospitality venues impacted by restrictions brought into Tier 2 and 3 areas of other regions.

Local unincorporated businesses can breathe a sigh of relief as the Self Employment Income Support Scheme (SEISS) grant from 1 November onwards has been doubled to 40% of profits. However, the generosity is still considerably lower than 80% of profits covered by grants earlier this year. Eligibility for the scheme remains restricted. Sole traders and partners within partnerships that made losses in the reference period, those where annual profits were higher than the arbitrary cap of £50,000 and unincorporated businesses who started trading recently still get no support.

Business West, of course, welcomes more help for embattled businesses across our region, but there is a long winter to come for firms remaining between the gaps in the various schemes. The last minute nature of the changes also limits the effectiveness of the changes to JSS as many businesses will have made redundancies based on the end of the furlough scheme – the help sadly may come too late for workers recently laid off before Thursday’s last minute announcement. The economic damage of COVID-19 is far from over.

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