Winter Economy Plan – comment from Andrew Moorby
The Chancellor announced yesterday that the proposed Autumn Budget would not now take place. Instead he delivered a relatively short economic update in which he announced some significant new measures in the fight to retain jobs during the pandemic period.
The measures announced are targeted to retain viable jobs and businesses. For all SMEs and for large companies suffering a decline in turnover, there is a new Job Support Scheme. If employees are retained and work 1/3 of their full equivalent hours, their pay can be partially funded by a grant from the Government. Hence an employee who would normally receive £1,000 but works 1/3 of their normal hours would receive £770 pounds with £220 of this being paid for by the Government. This will last 6 months from 1 November.
Other announcements included help for the self-employed similar to Job Support Scheme, targeted VAT help for the travel and hospitality sectors and addition help with cash flow, primarily linked to longer repayment terms for existing scheme borrowings. The various provisions have been largely welcomed although some have queried why the provisions could not have been announced sooner, whilst others would have liked to see more conditions attached to the funding to promote issues of wider economic benefit, such as training .
Given the uncertainties that we face, both in our day to day lives but also with our economy, it is not surprising that the Chancellor has decided not to hold a full budget and announce long terms plans. Instead he has reacted to the worsening pandemic with short term measures. Whether the new schemes achieve their desired aims only time will tell. The furlough scheme has cost £39bn so preserving jobs is not a cheap exercise. Ensuring that we get value for money is an essential part of the proposals but it is not easy to introduce highly targeted measure when the help is needed now.
It is worth noting that Budgets have typically been held in March in prior years so a postponement would not normally be an issue. This year, however, we must remember that the Brexit transition period ends on 31 December. The Autumn Budget was therefore important for many seeking to get some clarity about what was expected next year to allow them to plan accordingly. This opportunity has now been removed.