The Treasury has scrapped plans for an Autumn Budget this year because of a resurgence in the number of Covid-19 cases. The announcement came after the PM unveiled more stringent measures to counter a second wave of the virus as cases quadrupled on last month’s figures. The Treasury stated that it would be unfeasible to outline the state of the country’s finances in the midst of the renewed crisis. Instead, the Chancellor delivered a winter economy plan focusing on the here and now.
In the plan, the Chancellor once again turned his attention to damage limitation and the question of jobs. Sunak has been facing mounting pressure to say what will happen after the government’s furlough scheme expires at the end of October. With more than two million workers still on furlough, a new wave of job cuts was expected after government support was withdrawn next month.
Sunak announced a new wage subsidy scheme that will support “viable jobs” by topping up the wages of employees who can work at least one-third of their usual hours. The scheme will begin in November and last six months, with support targeting “firms that need it most”. All SMEs will be eligible, but larger businesses will only be eligible if their turnover has fallen during the crisis. The scheme will be open to all employers, even if they have not used the furlough scheme.
Other key points covered by the economy plan included an extension to all the government’s state-backed loan schemes in order to make repayment terms more manageable. The Chancellor also announced that he was cancelling a planned increase in VAT and keeping the lower rate of VAT for hospitality and leisure firms until 31 March 2021. There’s also an option for businesses to spread their VAT bills over 11 separate payments.
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