- central to plan is a new Job Support Scheme and extension of Self Employment Income Support Scheme
- and over one million businesses will get flexibilities to help pay back loans
The Chancellor Rishi Sunak today outlined additional government support to provide certainty to businesses and workers impacted by coronavirus across the UK.
Delivering a speech in Parliament, the Chancellor announced a package of measures that will continue to protect jobs and help businesses through the uncertain months ahead as we continue to tackle the spread of the virus.
The package includes a new Jobs Support Scheme to protect millions of returning workers, extending the Self Employment Income Support Scheme and 15% VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.
The announcement comes after the Prime Minster set out further measures to combat the spread of the virus over the winter, while preserving the ability to grow the economy.
The Chancellor of the Exchequer Rishi Sunak said:
The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery…
Our approach to the next phase of support must be different to that which came before.
The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve.
Since the beginning of the pandemic, the government has taken swift action to save lives, limit the spread of the disease and minimise damage to the economy.
Ministers have introduced one of the most generous and comprehensive economic plans anywhere in the world with over £190 billion of support for people, businesses and public services – including paying the wages of nearly 12 million people, supporting over a million businesses through grants, loans and rates cuts and announcing the Plan for Jobs in July.
The government has been consistently clear that it would keep its support under review to protect jobs and the economy, with today’s action reflecting the evolving circumstances and uncertainty of the months ahead.
The package of measures, which applies to all regions and nations of the UK, includes:
Support for workers
A new Job Support Scheme will be introduced from 1 November to protect viable jobs in businesses who are facing lower demand over the winter months due to coronavirus.
Under the scheme, which will run for six months and help keep employees attached to the workforce, the government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand.
Employers will continue to pay the wages of staff for the hours they work – but for the hours not worked, the government and the employer will each pay one third of their equivalent salary.
This means employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they can’t work.
In order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
The Job Support Scheme will be open to businesses across the UK even if they have not previously used the furlough scheme, with further guidance being published in due course.
It is designed to sit alongside the Jobs Retention Bonus and could be worth over 60% of average wages of workers who have been furloughed – and are kept on until the start of February 2021. Businesses can benefit from both schemes in order to help protect jobs.
In addition, the Government is continuing its support for millions of self-employed individuals by extending the Self Employment Income Support Scheme Grant (SEISS). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.
An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April – ensuring our support continues right through to next year.
This is in addition to the more than £13 billion of support already provided for over 2.6 million self-employed individuals through the first two stages of the Self Employment Income Support Scheme – one of the most generous in the world.
Tax cuts and deferrals
As part of the package, the government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year. This will give businesses in the sector – which has been severely impacted by the pandemic – the confidence to maintain staff as they adapt to a new trading environment.
In addition, up to half a million business who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
On top of this, around11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
Giving businesses flexibility to pay back loans
The burden will be lifted on more than a million businesses who took out a Bounce Back Loan through a new Pay as You Grow flexible repayment system. This will provide flexibility for firms repaying a Bounce Back Loan.
This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses. These measures will further protect jobs by helping businesses recover from the pandemic.
We also intend to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.
In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes that are helping over a million businesses until the end of November. As a result, more businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund. This change aligns all the end dates of these schemes, ensuring that there is further support in place for those firms who need it.
Investment in public services
At the start of the pandemic, the Chancellor pledged to give the NHS and public services the support needed to respond to coronavirus – and as of today, £68.7 billion of additional funding has been approved by the Treasury, including £24.3 billion since the Summer Economic Update in July.
This funding has helped ensure the procurement of PPE for frontline staff, provided free school meals for children while at home and protected the country’s most vulnerable. In addition, the £12 billion funding to roll-out the Test and Trace programme has played a key role helping to unlock the economy, enabling businesses like restaurants and bars to serve customers again.
As announced earlier this year, the Treasury has also guaranteed the devolved administrations will receive at least £12.7 billion in additional funding. This gives Scotland, Wales and Northern Ireland the budget certainty to for coronavirus response in the months ahead.
Responses from business groups
Dame Carolyn Fairbairn, CBI Director-General, said:
These bold steps from the Treasury will save hundreds of thousands of viable jobs this winter. It is right to target help on jobs with a future, but can only be part-time while demand remains flat. This is how skills and jobs can be preserved to enable a fast recovery.
Wage support, tax deferrals and help for the self-employed will reduce the scarring effect of unnecessary job losses as the UK tackles the virus. Employers will apply the same spirit of creativity, seizing every opportunity to retrain and upskill their workers.
The Chancellor has listened to evidence from business and acted decisively. It is this spirit of agility and collaboration that will help make 2021 a year of growth and renewal.
Mike Cherry OBE, Federation of Small Businesses National Chair, said:
The UK’s small businesses are facing an incredibly difficult winter. Today’s support package is the flipside of the coin to Tuesday’s COVID-19 business restrictions.
It is a swift and significant intervention, extending emergency SME loans, creating new wage support for small employers and the self-employed, and providing cashflow help on VAT deferrals and new Time To Pay for any tax bills to HMRC.
We welcome that the Chancellor is ensuring that decisions to protect public health are informed by the need to protect the economy, people’s jobs and prospects for young people in our schools and workplaces.
BCC Director General Adam Marshall said:
The measures announced by the Chancellor will give business and the economy an important shot in the arm. Chambers of Commerce have consistently called for a new generation of support to help preserve livelihoods and ease the cash pressures faced by firms as they head into a challenging and uncertain winter.
The Chancellor has responded to our concerns with substantial steps that will help companies preserve jobs and navigate through the coming months. The new wage support scheme will help many companies hold on to valued employees after furlough ends, and the extension of business lending schemes and tax forbearance will lessen the immediate pressure on cash flow for many affected firms.
As we look past the immediate challenge, more will need to be done to rebuild and renew our economy. Chambers of Commerce across the UK will continue to work with government to ensure the benefits of these schemes are delivered to firms on the ground.
Amid Pandemic, Here's What Researchers Have Learned About The Economy – NPR
Editor’s note: This is an excerpt of Planet Money‘s newsletter. You can sign up here.
COVID-19 has been a massive disaster. But it has also been like a massive natural experiment. During the last nine months, we’ve learned a lot about the coronavirus, its economic effects and effective interventions to help manage the pain of another wave. So we decided to sum up some of the economic research.
Poverty … fell?
In April, the unemployment rate hit 14.7% — the most disastrous figure since the Great Depression. Over 20 million Americans had lost their jobs or been furloughed. And yet something crazy happened — the national poverty rate actually declined.
That’s one of the findings of a study by economists Jeehoon Han, Bruce D. Meyer and James X. Sullivan, who crunched data from the Census Bureau about income and poverty during the coronavirus pandemic. They found that the poverty rate fell from 10.9% in January and February to 9.4% in April, May and June. They credit the decline to government action, especially with the CARES Act, which massively increased unemployment benefits and sent large checks to middle- and low-income Americans. Had the government not done this, they found, poverty would have risen over 2.5 percentage points.
Since the expiration of some of the federal government’s assistance this summer, the poverty rate has been ticking back up, erasing the decline during the first phase of the pandemic.
The mighty are getting mightier
A few months ago, we published a newsletter that explained why the crisis was making powerful corporations even more powerful. As consumers sheltered in place, they cut spending at small businesses and shifted more spending online — benefiting megacorporations like Amazon. On top of that, the government seemed to be buttressing big corporations while leaving many small and midsize businesses scrambling. But another factor has been playing in the big guys’ favor: recruiting opportunities.
Economists Shai Bernstein, Richard R. Townsend and Ting Xu analyzed data from AngelList Talent, a job search site for tech and startup jobs, to see how the pandemic has affected job searches. They found that “job seekers shifted their searches toward larger firms and away from early-stage ventures” and were more open to lower salaries and a broader range of positions. When it comes to recruiting talent, they found, this shift has benefited large, more established companies while hurting smaller upstarts. They conclude that this “flight to safety” of qualified job seekers during the downturn has hurt entrepreneurship and competition.
According to Gallup, back in April, a jaw-dropping 51% of workers reported they were “always” working remotely. A cool study by Steve Cicala shows how this could be seen in electricity use, with commercial and industrial buildings — where we have traditionally worked — using between 12% and 14% less electricity than they would have during normal times and residential buildings using an average of 10% more.
But the remote-work wave is already receding. Gallup’s most recent survey, from mid-September, found the share of people who report “always” working remotely has shrunk to 33%. Expect power bills at office parks and skyscrapers to start climbing.
COVID-19 is changing minds
Economists Alex Rees-Jones, John D’Attoma, Amedeo Piolatto and Luca Salvadori conducted a survey of over 2,500 Americans to see how COVID-19 has affected their opinions of government programs. They found “real and perceived exposure to the consequences of COVID-19 strongly predict support for long-term expansions to unemployment insurance and government-provided healthcare.” This is true, they found, even when controlling for people’s political beliefs and demographic characteristics. Rees-Jones says, “Compared to the average survey respondent, a respondent facing a very large number of county deaths (more than 95% of other respondents) is 6.3 percentage points more likely to support long-term expansions to unemployment insurance and 5.8 percentage points more likely to support long-term expansions to government-provided healthcare.” In short, it seems that COVID-19 has increased political support for bigger government.
PPP didn’t work — or did it?
The Paycheck Protection Program was the federal government’s big effort to save small businesses. It provided grants and loans to help them survive the pandemic. Economists are still debating whether PPP was effective. Some studies, including one by Raj Chetty, John N. Friedman, Nathaniel Hendren and Michael Stepner and another by Christopher Neilson, John Eric Humphries and Gabriel Ulyssea, found little or no evidence that the program helped save jobs at small businesses. Others, including one by Robert P. Bartlett III and Adair Morse and another by Alexander W. Bartik, Zoe B. Cullen, Edward L. Glaeser, Michael Luca, Christopher T. Stanton and Adi Sunderam, found that the program helped increase the probability that small businesses would survive the pandemic. This debate over the effectiveness of PPP in saving small businesses and jobs matters because it should inform what relief package comes next, if any.
Motorcycles can be dangerous
In early-to-mid August, almost half a million motorcyclists congregated in Sturgis, S.D., for an annual motorcycle event. It offered economists Dhaval M. Dave, Andrew I. Friedson, Drew McNichols and Joseph J. Sabia the opportunity to see the effects of a COVID-19 superspreader event.
The researchers used data from cellphones to measure the movement of people, along with data from the Centers for Disease Control and Prevention to measure the spread of the coronavirus. They found that by Sept. 2, about a month after the rally began, COVID-19 cases increased by approximately six to seven cases per 1,000 people in the county where the event was held. Meanwhile, they found that “counties that contributed the highest inflows of rally attendees experienced a 7.0 to 12.5 percent increase in COVID-19 cases relative to counties that did not contribute inflows.” Not everyone buys it. Researchers at Johns Hopkins University have criticized this study’s design, arguing that its findings should be “interpreted cautiously.”
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Are more steps needed to help the economy recover? – News 1130
Skills for the new economy – The Globe and Mail
Event summary produced by The Globe and Mail Events team. The Globe’s editorial department was not involved.
As the digital transformation gains velocity though the pandemic, business leaders are assessing the skills most essential for future-ready workforces. The Globe and Mail hosted a webcast on October 13 to bring business and academic leaders together to discuss the knowledge employees will need to succeed in the shifting economy. The webcast was presented with support from Athabasca University. Sean Stanleigh, head of The Content Studio at The Globe and Mail, moderated the panel discussion.
Highlights from the discussion appear below the webcast recording.
Highlights from the discussion:
1). The nature of work is changing
Much of the work we currently do is process or task focused but that will change with the development of technologies such as artificial intelligence (A.I.), said Joe Cox, Canada research chair in digital disruption and organizational transformation with Athabasca University. With A.I. in the picture, they will shift their focus to figuring out the business problems that need solving and how best to pose these problems to the technology systems. The role of managers will also change, he added, skewing away from their current priority of predicting what will happen in the future, to making good judgements.
2). Training is vital for success
The digital economy requires individuals who have specific technology skills, especially in the area of cybersecurity, said Claudette McGowan, global executive officer for cybersecurity with TD Bank. She pointed out the skills shortfall in cybersecurity and noted it could be a good opportunity for mid-career individuals to pivot into a growing field by taking training at an academic institution or privately. She said reverse mentorships are also valuable, providing an opportunity for more senior staff to shore up their skills in emerging technologies, social media and data analytics.
3). Soft skills and micro-skills will dominate
Nicole Verkindt is a tech entrepreneur and founder of OMX, a procurement technology company. She said new hires at OMX fall into two camps. The first relates to soft skills, including judgement ability, in order to interpret data from technology programs. Diversity of backgrounds and experiences is also important. The second area relates to specific skills. In the past, an undergrad degree in business might be sufficient to achieve a job in marketing, for example. Increasingly, however, she is looking for candidates with niche skills, such as experience with HubSpot or data analytics tools. An entrepreneurial mindset is also highly valued, she added.
Watch the full webcast above for specific examples of the knowledge, experience and skills of most importance for success in the digital economy.
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