Industry experts have criticised Chancellor Rishi Sunak’s enhanced Job Support Scheme saying it causes even more confusion and fails to help businesses who are struggling with cashflow and additional staff costs.
Last week (October 9), the Chancellor announced he would extend the government’s Job Support Scheme for businesses forced to shut due to coronavirus measures.
He said from November the government will pay grants to cover two thirds of the salary of each employee off work for a minimum of seven consecutive days, up to a maximum of £2,100 a month per employee.
This was an extension to the previously announced jobs support scheme which will see the government contribute one third of a person's unpaid hours.
However, Lee Wild, head of equity strategy at Interactive Investor, warned payments will need to be delivered to businesses promptly if the scheme were to stop redundancies and more businesses from going under.
Mr Wild said: “The penny has dropped at Number 11 that far more firepower is needed to prevent a wave of redundancies this winter as a Covid second wave takes hold.
“Just weeks after launching his new job support scheme, chancellor Rishi Sunak is having to extend help to workers at businesses that are closing down.
“But, as with many other policies during the pandemic, there are more questions than answers, and having easy access and getting paid quickly will be critical if this scheme is to have the desired effect.”
The new scheme has also been criticised for leaving out businesses who will be indirectly affected by new lockdown measures.
Richard Churchill, a business advisory partner at Blick Rothenberg, said the measures did not offer any relief to businesses in the supply chain, such as breweries supplying pubs.
Mr Churchill said: “The owners of such businesses will still be faced with very difficult decisions in relation to retention of employees with the increased business costs under the Job Support Scheme commencing 1 November.”
He added: “Even for businesses who are eligible for the enhanced Job Support Scheme a limiting factor may well still remain in respect of their viability being cashflow. The Job Support Scheme operates via a retrospective claim made following payroll submissions, i.e. amounts in respect of November salary costs will be claimed and paid in December.
“Closed down businesses will still be liable for additional staff costs. The Job Support Scheme does not cover other contractual benefits, redundancy liabilities will continue to accrue, and there will be additional holiday being accrued over the period of close down.
“These accruing costs may force those businesses with no cash to close in any advent even if the lockdown restrictions are eased.”
Ben Beadle, chief executive of the National Residential Landlords Association, said the scheme would offer no support to workers who are already behind with their rent payments.
He said: “The impact of local lockdowns makes it even more important that the Chancellor acts without further delay to bring in a package that will help tenants and landlords to sustain tenancies. Landlords cannot be expected to subsidise tenants who are struggling to meet arrears indefinitely.