Firms remain at risk

Holyrood’s road map ‘out of line’ with Treasury scheme

Liz Cameron

Liz Cameron: ‘misalignment will affect crucial areas of the economy’ (pic: Terry Murden)

A business leader in Scotland says thousands of firms north of the border are at increased risk because the government’s route map back to work is out of alignment with the Treasury’s newly tapered support scheme.

Chancellor Rishi Sunak today sought to reassure businesses, including the self-employed, that the government will continue to provide further help as they move out of lockdown.

Support for the self-employed will be extended beyond Sunday’s feared cut off, while companies with staff on furlough will be encouraged to introduce part-time working a month earlier than expected, and from September the level of subsidy will be reduced.

Business groups broadly welcomed the extension of both schemes, saying they would provide companies of all sizes with a degree of certainty and the required support needed as they begin the slow return to work.

However, Liz Cameron of the Scottish Chambers of Commerce, said: “The big challenge for Scottish businesses is that the UK government’s new tapered approach to the furlough scheme is not aligned with the Scottish Government’s roadmap out of lockdown. 

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“This misalignment will affect crucial areas of the economy such as tourism which are forced to close for longer.

“Before tapering hits, we need to ensure all sectors of our economy are able to generate trade so they are able to pay employees. Currently there is still a lack of clarity for businesses in Scotland over when they can re-open. We urge the chancellor to adopt measures to ensure that businesses facing ruin as the furlough scheme tapers aren’t forced to fall at the last hurdle.’’

The Chancellor announced that those eligible under the Self-Employment Income Support Scheme (SEISS), which has so far seen 2.3 million claims worth £6.8 billion will be able to claim a second and final grant in August.

Rishi Sunak

Rishi Sunak: a lifeline for millions

The grant will be worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.

From 1 July, one million businesses which used the Coronavirus Job Retention Scheme to furlough 8.4 million staff, will begin to bring these employees back part-time.

The Treasury says this is a month earlier than previously announced “to help support people back to work”. Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them – and will be responsible for paying their wages while in work.

The level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work.

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This means that for June and July the Government will continue to pay 80% of people’s salaries. In the following months, businesses will be asked to contribute, but it does mean individuals will continue to receive 80% of salary covering the time they are unable to work. The level of support will fall to 70% in September and 60% in October.

The scheme updates mean that the following will apply for the period people are furloughed:

  • June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
  • August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • September: The government will pay 70% of wages up to a cap of £2,190. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.

Mr Sunak said: “Our top priority has always been to support people, protect jobs and businesses through this crisis. The furlough and self-employment schemes have been a lifeline for millions of people and businesses. 

“We stood behind Britain’s businesses and workers as we came into this crisis and we stand behind them as we come through the other side.

“Now, as we begin to re-open our country and kickstart our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world.”

Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. Employees who believe they are not getting their 80% share can also report any concerns to the HMRC fraud hotline. HMRC will not hesitate to take action against those found to be abusing the scheme.

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