Furloughed employees who can go back to work for a third of their hours will have their wages subsidised for the next six months, Chancellor Rishi Sunak has announced.
The new job support scheme, allowing workers to get 77 per cent of their normal pay for working 33 per cent of their hours, will replace the furlough scheme that has supported the wages of nine million people since lockdown began in March.
In the Commons Sunak said the scheme will cover “two-thirds of the pay they have lost by reducing their working hours”.
He explained to MPs: “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.”
“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.”
The scheme will be open to employers across the United Kingdom, even if they have not previously used the furlough scheme and will run for six months.
Sunak 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.”
