The Chancellor has just set out the Government's Winter Economy Plan – the next phase of our planned economic response to Coronavirus, following the Prime Minister’s address to the nation earlier this week.
There are reasons to be cautiously optimistic: thanks to the Government's comprehensive and generous response in March, we have seen three consecutive months of economic growth, millions of people have moved off the furlough scheme and back to work, and consumer spending is returning.
But the resurgence of the virus threatens our recovery. Now it is clear we have to live with Coronavirus for months to come, this means the economy cannot return to exactly as it looked in March and the economic rationale for the next phase of support must be different to that which came before.
The Chancellor has therefore announced the following package of support:
- A Job Support Scheme to directly fund businesses to protect viable jobs and people’s wages, rather than laying employees off through a difficult winter.
- To ensure parity between employees and self-employed, the Government will also provide a grant extension for self-employed small businesses who used the existing SEISS scheme, with refined eligibility criteria.
- To minimise the strains on companies’ cashflows so they can focus their resources on supporting employment, the new 'Pay as You Grow' scheme will cut Bounce Back loan repayments by almost half by extending the loans to 10 years.
- The temporary VAT cut will be extended to Spring 2021 to support hospitality and tourism businesses, and a new payment plan will allow companies to defer VAT and tax liabilities for a further year.
- The Government will also give self-assessment businesses more time to pay back through an 18 month deferral.
