Chancellor's Winter Economic Plan

The details behind the plan

Job Support Scheme (“JSS”)

Commences 1 November 2020 to replace the Job Retention Scheme, lasting 6 months.

In order to be eligible for the scheme:

  • An employee must work at least a third of their normal hours.
  • Small and medium sized business are automatically eligible for the scheme.
  • Larger business will be eligible if their turnover has fallen by a third during the crisis.
  • Employers do not have to have used the JRS to qualify for the JSS.

How will the scheme work?

  • Employee works a minimum of a third of their contracted hours – paid by the employer.
  • Where businesses are forced to shut/ not been able to open due to the Government’s restrictions, employees will receive two-thirds of their normal pay up to a limit of £2,100 per month. Businesses who were forced to shut as a result of specific workplace outbreaks by local public health authorities are not eligible for this scheme.
  • The Government will provide a third of the pay for the portion that the employee wasn’t able to work, up to £697.72 per month.
  • A third of the remaining shortfall will be paid by the employer and the other third borne by the employee.



  • The maximum contribution by the Government is 22%, whilst the employer can pay up to 22% more than the actual hours worked.
  • There has been a shift in onus from the Government to the employer (80% contribution under JRS to just 22% under JSS) will result in a significant increase in redundancies when the JRS comes to an end.
  • Employees on zero hours contracts, for businesses which have reopened, will not be eligible for the grant and so will suffer as a result although they may be used more frequently by employers requiring a more flexible workforce.
  • In many cases it will be cheaper to have one person in full time employment rather than two people working part time.

We expect most employers may look to weigh up the benefit of keeping their employees in employment, at least as far as 31 January 2021 to qualify for the £1,000 Job Retention Bonus. Comparing the cost of redundancies versus the top ups required under the JSS by keeping more staff on a part time basis.

Business Loan Schemes – Pay as you Grow

  • Extensions of the repayment period on Bounce Back Loans (“BBL”) and guarantee period on Coronavirus Business Interruption Loans Schemes (“CBILS”) from 6 to 10 years.
  • Businesses that are struggling can choose to make interest only payments for 6 months.
  • Businesses that are identified as in “real trouble” can avail of a 6-month payment holiday, however, no guidelines for identifying those businesses in this situation have been issued yet.
  • No effect to a business’ credit rating for availing of any of the options under this scheme.
  • Extended the deadline to apply for a CBILS loan to 31 November.
  • Plan to announce a new loan scheme to become available from January 2021.

The Government claims that the changes to the BBL and CBILS will see repayments halved and they are enabling more businesses to access funding, yet it seems to forget that this money is not free and comes at a cost of higher interest payments.

The unspoken reality is a lot of these loans will end up being written off with businesses and lenders (who are expected to cover 20% of the risk) suffering in the process. There is no indication from the government that this debt burden will be converted to grants or equity and many believe these measures will simply kick the can down the road even further.


  • 15% emergency VAT cut for the tourism and hospitality industries has been extended to 31 March 2021.
  • Businesses who deferred their VAT bills that fell due between 20 March and 30 June 2020, which was originally due to be paid by 31 March 2021 will be able to pay back their taxes in 11 smaller, interest-free instalments.


Further respite was provided as follows:

  • Statutory demands and winding up petitions restrictions extended to 31 December 2020
  • Restriction on landlord forfeiture of commercial premises extended to expire on 31 December 2020

Notably there has been no extension to the suspension of liability for wrongful trading which expires on 30 September 2020. Perhaps this is a reinforcement of the Government’s message that they are focussed on supporting longer term viable businesses and a reminder to those that may have no future to take appropriate action sooner rather than later.  

Anyone with any concerns or queries in respect of how these changes may impact their business or any of their clients are welcome to contact Tom Straw on 0207 186 1148.