In the House of Commons today (Thursday 24 September), Sunak outlined the new jobs scheme, where employees have to work at least a third of their normal hours, paid by the employer, starting on 1 November and running for six months.
The employer and the Government will together push wages to two thirds (one third paid by employer and one third paid by Government) of the employee's pay, which has been lost by a reduction in hours.
This means employers will have to pay 55% of an employee's pay and the Government will cover 22%.
The level of grant will be calculated based on employee's usual salary, capped at £697.92 per month.
From 1 November, for the next six months, the Job Support Scheme will protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19. pic.twitter.com/8NpIKpQV8y— HM Treasury (@hmtreasury) September 24, 2020
Sunak said: “First 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 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 that need it the most – all small and medium size businesses are eligible but larger businesses, only when their turnover has fallen through the crisis.
"It will be open to employers across the UK even of they have not previously used the furlough scheme. The scheme will run for six months, starting in November and employers retaining furloughed staff on shorter hours can claim both the Job Support Scheme and the Jobs Retention Bonus."
Sunak also said the VAT reduction from 20% to 5% on food, soft drinks and accommodation will continue until the spring for hospitality businesses.
He said: "On current plans, their VAT rates will increase from 5% back to the standard rate of 20% on 13 January 2021.
"So to support more than 150,000 business and help protect 2.4m jobs through the winter, I am announcing today we are cancelling the planned increase and will keep the lower 5% VAT rate until March next year."
Businesses that deferred VAT bills will be given more time to repay through the New Payment Scheme.
This provides the option of paying the bill back in small instalments.
Instead of paying back a lump sum at the end of March 2021, businesses can make 11 smaller interest-free payments during the 2021-22 financial year.
Self-assessment taxpayers will also be eligible for a separate additional 12-month extension from HMRC on the Time to Pay self-service facility.
This means payments deferred from July 2020 and those due in January 2021 will now not need to be paid back until January 2022.
Self employed help
In addition to the Job Support Scheme, the Self-Employed Income Support Scheme has also been extended until 30 April 2021.
The initial lump sum will cover three months' worth of profits from November 2020 until the end of January 2021, covering 20% of average monthly trading profits, up to a total of £1,875 via a Government grant.
An additional second grant, which may be adjusted to respond to developing circumstances, will be available for self-employed workers to cover February to the end of April 2021.
The application deadline for all coronavirus loan schemes has been extended to 30 November.
The Government is also introducing Pay As You Grow – enabling businesses to have more flexible options on paying back the Bounce Back Loan.
Sunak said: "Bounce Back Loans have given more than 1m small businesses a £38bn boost to survive this pandemic. To give those businesses more time and greater flexibility to repay their loans we are introducing Pay As You Grow.
"This means loans can now be extended from six to 10 years, nearly halving the average monthly repayment. Businesses struggling can choose to make interest-only payments and anyone in real trouble can apply to suspend payments altogether for up to six months."