Key points from Rishi Sunak’s winter economy plan – at a glance
Rishi Sunak #RishiSunak
Rishi Sunak’s opening remarks
Sunak says the UK is in a fundamentally different position to it was in March when coronavirus first spread.
The chancellor says millions of people have moved off furlough and back to work as the economy reopens, but the resurgence of the virus and measures needed in response pose a threat to a fragile economic recovery.
He says the “economy is now likely to undergo a more permanent economic adjustment”.
Peter Walker, political correspondent: Sunak is not a devotee of Boris Johnson’s brand of perennial boosterism, but he begins with a slightly upbeat note, stressing that the UK is in a better position than in March. But he does underline the need for more intervention. This is the balance he faces: accept things are still serious, but don’t overly spook everyone.
Furlough scheme replacement
Sunak announces a new “jobs support scheme” to subsidise the wages of people in work to replace the furlough scheme when it ends at the end of October.
Businesses will have the option of keeping employees in a job on shorter hours, rather than making them redundant.
Workers must work a third of their usual hours, paid by their employer as normal.
For the time they are not working, the government will pay a third of their usual pay, and the employer will pay a third of their usual pay.
Including the pay for the hours they are working, the Treasury says this means workers will get 77% of their usual pay.
The scheme will be targeted at businesses that need it most – all small and medium-sized firms – but only for big companies if turnover has fallen by a third.
The scheme will run for six months starting in November.
Firms can claim both the jobs support scheme and the jobs retention bonus.
A grant for self-employed workers will be extended on similar terms.
PW: This sounds very much like the German-style jobs support scheme that many people, including some Conservative MPs, have been seeking from Sunak. It gives extra protection for jobs while allowing the furlough programme to wind down, as had been pledged.
Business loans
Sunak announces “pay as you grow” to help companies repay state-backed business loans.
Loans can be extended from six to 10 years, almost halving repayments. Interest-only payments can be made, and firms in “real trouble” can suspend their payouts.
All of the government’s state-backed loan schemes will be extended until the end of 2020, and the government is starting work on a new guarantee loan programme to begin in January.
The chancellor will allow businesses to spread their VAT bills over 11 separate payments.
PW: It’s perhaps of marginal interest to the businesses affected, but it’s worth noting how good Team Sunak are at coming up with catchy names for his initiatives. We had eat out to help out. Now we have “ pay as you grow”. It is all good for the chancellor’s personal brand.
Hospitality sector
Sunak says on current plans VAT will increase from 5% to 20% on 13 January.
The cut had been made at the chancellor’s summer economic update.
The chancellor says he is cancelling a planned increase in VAT, keeping a lower rate of VAT for hospitality and leisure firms until 31 March 2021.
PW: By the standards of a chancellor, Sunak has become almost poetic in his closing remarks, stressing the fact that “life means more than simply existing”, and defending recent moves to open the economy. Life will be tricky, he says, and people will need to learn to live with the virus. These are much the same sentiments as expressed several times by Boris Johnson, but many of the Tory MPs watching will note that the chancellor is sometimes much better at expressing them than his prime minister. Expect this section to get replayed on the evening news.