Here is a summary of the Chancellor, Rishi Sunak's major announcement today.
The Plan for People’s Jobs and Incomes, will protect people’s jobs; offer more generous support to those who are without jobs; strengthen the safety net for the self-employed; and help people stay in their homes.
The Government is standing behind employers – and they are asking that businesses do their bit and stand behind workers.
- For the first time in our history – the Government will help pay people’s wages through the Coronavirus Job Retention Scheme – offering grants to employers who promise to retain their staff, covering most of the cost of paying people’s wages.
- The Government are also deferring the next three months of VAT until the end of the financial year – an injection of over £30 billion of cash to businesses to help businesses pay people and keep them in work.
- They are also acting so that, if the worst happens, there is a stronger safety net to fall back on by increasing Universal Credit and Working Tax Credit by £1,000 a year for the next 12 months – that’s nearly £7 billion of extra support.
Protecting people’s jobs:
- The Government is stepping in and helping pay people’s wages – a scheme which is one of the most generous of any in the world – paying grants to support as many jobs as necessary. Any employer in the country – large, small, charitable or for profit – who promises to retain their staff, can apply for a grant to cover most of the cost of paying people’s wages. Government grants will cover 80 per cent of the salary of retained workers up to a total of £2,500 a month – above the median income. They will place no limit on these grants. The cost of wages will be backdated to 1st March and will be open initially for at least three months – and they will extend the scheme for longer if necessary.
- Deferring the next three months of VAT tax, a direct injection of over £30 billion of cash to employers, equivalent to 1.5 per cent of GDP. That means no business will pay any VAT from now until the end of June, and they will have until the end of the financial year to repay those bills.
- The Coronavirus Business Interruption Loan Scheme will now be interest free for twelve months, an extension from the initial announcement of six months. The Government has already introduced and announced an extension to the Business Interruption Loan Scheme, which is for small and medium-sized businesses. On Tuesday, the Chancellor expanded the amount that can be borrowed from £1.2 million to £5 million, and is now extending the time frame of no interest on these loans from six months to twelve months.
- Offering more generous support to those who are without employment:
Strengthening the safety net for those who need it:
- Increasing Universal Credit and Working Tax Credit by £1,000 a year – a cash injection of nearly £7 billion in the welfare system. We are increasing the Universal Credit standard allowance, for the next 12 months, by £1,000 a year. We will also increase Working Tax Credit by the same amount for the next 12 months. Together these measures will benefit over 4 million of our most vulnerable households.
Strengthening the safety net for people who work for themselves:
- Suspending the minimum income floor for twelve months – meaning self-employed people can now access, in full, Universal Credit at a rate that is equivalent to Statutory Sick Pay for employees. For the self-employed, we are also deferring income tax self-assessment payments for July until the end of January 2021. We will announce further measures to support self-employed people over the coming days.
Helping people stay in their homes:
- Providing nearly £1 billion of support for renters, by increasing the generosity of housing benefit and Universal Credit, so that the Local Housing Allowance will cover at least 30 per cent of market rents in local areas.