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Winter economy plan: Key points to Rishi Sunak’s announcement

Chancellor of the Exchequer Rishi Sunak leaves No 11 Downing Street for the House of Commons to give MPs details of his winter economy plan.
Chancellor of the Exchequer Rishi Sunak leaves No 11 Downing Street for the House of Commons to give MPs details of his winter economy plan.

Rishi Sunak has unveiled his emergency job protection plan amid new Covid-19 restrictions, including the creation of a new job support scheme.

The Chancellor said the resurgence of the virus, and measures that must be taken in response, pose a threat to the “fragile economic recovery”.

Key among the new announcements is the creation of a new job support scheme to replace furlough.

Mr Sunak said the government must create “new opportunities” to allow the economy to move forward and that means supporting people to be in “viable jobs which provide genuine security”.

However, he admitted he could not save “every business or every job”.

New jobs support scheme 

The new job support scheme will see the government directly support the wages of workers who can work for at least a third of their normal hours.

The government, together with employers, will then increase those people’s wages by covering two thirds of the pay they have lost by reducing their working hours.

All small and medium-sized firms will be eligible but larger firms will only be eligible if their turnover has fallen during the crisis.

The scheme is open to all employers across the UK, even if they have not previously used the furlough scheme.

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It will run for six months starting from November.

Mr Sunak also announced he is extending the existing self-employed grant on similar terms and conditions as the new jobs support scheme.

Pay as you grow 

The terms for the business bounceback loans will be extended from six to 10 years – nearly halving the average monthly repayment.

This will give businesses more time and greater flexibility to pay back loans, the chancellor said.

Mr Sunak said anyone in “real trouble” can apply to suspend their repayments altogether for up to six months.

No business will see their credit rating affected as a result.

The deadline for all government loan schemes will be extended to the end of this year and the chancellor is starting work on a new successor loan scheme, set to begin in January.

VAT 

VAT bills due in March can be spread over 11 smaller repayments with no extra interest.

Any of the millions of self-assessed income tax payers who need extra help can also now extend their outstanding tax bill over 12 months from next January.

Hospitality and tourism support 

Under current plans, VAT rates for the hospitality and tourism industry will increase from 5% back to the standard rate of 20% on January 13.

The chancellor announced this will be delayed until March 31.

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