Rishi’s virus lifeline gets a welcome in the West
THE Chancellor’s emergency measures to protect the coronavirus-hit economy have been welcomed as good news for the South West and its vital hospitality industry.
Kim Conchie, chief executive of Cornwall Chamber of Commerce, said the newly announced Job Support Scheme will assist businesses over the tough winter months, and the extension of the 15% VAT reduction for tourism and hospitality businesses would prove a major boost.
He said that by singling out the sector it showed Chancellor Rishi Sunak (pictured right) and the Government had realised the huge pressure it was under.
However, he said the measures should have been announced two days earlier, when Prime Minister Boris Johnson spooked markets and worried business owners by bringing in strict new anti-virus rules, including 10pm curfews for bars and restaurants.
Mark Duddridge, Chair of the Cornwall and Isles of Scilly Local Enterprise Partnership, said they welcomed the package to avoid a furlough cliff-edge but there would still be many viable businesses with insufficient work to bring people back part-time – and those jobs will be lost.
“This is a welcome short-term package and we look forward to working with Government on longer-term recovery measures that can deliver its promised levelling-up agenda to the people of Cornwall and Scilly,” he said.
Exeter Chamber said it was concerned the measures might not go far enough to protect otherwise viable businesses.
THE tourism industry in Devon and Cornwall has had its VAT lifeline extended by Chancellor Rishi Sunak.
In statement to the House of Commons yesterday Mr Sunak said he would be cancelling a planned increase in VAT for tourism and hospitality businesses – and extending the lower 5% rate until March 31, 2021.
Unveiling his Winter Economy Plan, the Chancellor said the resurgence of Covid-19 posed a threat to the “fragile economic recovery”.
While the furlough scheme – which saw workers sent home by employers continue to be paid by the government – will not be extended, the Chancellor said a new scheme would see the Government “directly support” the wages of people in viable jobs working at least a third of their normal hours.
He also announced a “pay as you grow” scheme to allow firms to repay bounce back loans over a period of up to 10 years and said he was extending the self-employed grant on similar terms as the next job support scheme.
He told MPs in the Commons: “Earlier this week the Prime Minister set out the next stage of the Government’s health response to coronavirus. Today, I want to explain the next phase of our planned economic response.
“The House will be reassured to know I have been developing plans to protect jobs and the economy over the winter period. Plans that seek to strike the finely judged balance between managing the virus and protecting the jobs and livelihoods of millions.”
Mr Sunak said he understood people would be “anxious and afraid and exhausted about the prospect of further restrictions on our economic and social freedoms”, but added that “there are reasons to be cautiously optimistic”.
“In economic terms, while our output remains below where it was in February, we have seen three consecutive months of growth and millions of people have moved off the furlough and back to work,” he told MPs
“So our task now is to move to the next stage of our economic plan, nurturing the recovery by protecting jobs through the difficult winter months.”
He said support must evolve and there had been “no harder choice than to end the furlough scheme”.
“The furlough was the right policy at the time we introduced it, It provided immediate short-term protection for millions of jobs through a period of
‘We have seen three consecutive months of growth and millions have moved off the furlough and back to work’
acute crisis,” he said. “But as the economy re-opens it is fundamentally wrong to hold people in jobs that only exist inside the furlough.”
“I’m announcing today the new Jobs Support Scheme,” Mr Sunak told the Commons. “The Government will directly support the wages of people in work, giving businesses who face depressed demand the option of keeping employees in a job on shorter hours rather than making them redundant.
“The Jobs Support Scheme is built on
three principles. First, it will support viable jobs. To make sure of that employees must work at least a third of their normal hours and be paid for that work as normal by their employer. The Government, together with employers, will then increase those people’s wages covering two-thirds of the pay they have lost by reducing their working hours, and the employee will keep their job.
“Second, we will target support at firms who need it the most. All small and medium-sized businesses are eligible but larger businesses only when their turnover has fallen through the crisis. Third, it will be open to employers across the United Kingdom, even if they have not previously used the furlough scheme.
“The scheme will run for six months starting in November and employers retaining furloughed staff on shorter hours can claim both the Jobs Support Scheme and the Jobs Retention bonus.”
“I am extending the existing selfemployed grant on similar terms and conditions as the new Jobs Support Scheme.”
Mr Sunak said also said that bounce back loans have given more than one million small businesses a £38 billion boost to survive, adding a “pay as you grow” scheme would be introduced to give these firms more time to repay the loans.
He told the Commons: “This means loans can now be extended from six to 10 years, nearly halving the average monthly repayment.
“Businesses who are struggling can now choose to make interestonly payments and anyone in real trouble can apply to suspend repayments all together for up to six months. No business taking up pay as you grow will see their credit rating affected as a result.”
Rishi Sunak also announced that the temporary reduction of VAT rates from 20% to 5% will remain in place until 31 March 2021.
He said: “The final step I’m taking today will support two of the most affected sectors, hospitality and tourism.
“On current plans, their VAT rates will increase from 5% back to the standard rate of 20% on January 13.
“So to support more than 150,000 businesses and help protect 2.4 million jobs through the winter, I’m announcing today that we are cancelling the planned increase and will keep the lower 5% VAT rate until March 31 next year.”
Mr Sunak said that the Government has now provided “over £12 billion for Test and Trace” and concluded by saying: “The truth is the responsibility for defeating coronavirus cannot be held by Government alone. It is a collective responsibility shared by all because the cost is paid by all.”