Coronavirus: UK chancellor unveils 'radical' package of wage subsidies and loans

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CHANCELLOR RISHI SUNAK: I'm announcing today the new jobs support scheme. The government will directly support the wages of people in work, giving businesses who face depressed demand the option of keeping employees in a job on shorter hours rather than making them redundant. The job support scheme is built on three principles. 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 then increase those people's wages, covering 2/3 of the pay they have lost by reducing their working hours. And the employee will keep their job. Second, 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. Third, it will be open to employers across the United Kingdom, even if 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. Mr Speaker, throughout this crisis, we have sought parity between employees and the self-employed, providing more than 13 billion pounds of support to over 2.6 million self-employed small businesses. So I am extending the existing self-employed grant on similar terms and conditions as the new jobs support scheme. Mr Speaker, these are radical interventions in the UK labour market-- policies we have never tried in this country before.

Together-- with the jobs retention bonus, the kickstart scheme for young people, tens of billions of pounds of job creation schemes, new investment in training and apprenticeships-- we are protecting millions of jobs and businesses. Businesses need every extra pound to protect jobs rather than repaying loans and tax deferrals. So I am taking four further steps today to make that happen. First, bounceback loans have given over a million small businesses a 38 billion pound 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 who are struggling can now choose to make interest only payments. And anyone in real trouble can apply to suspend repayments altogether for up to six months. No business taking up pay as you grow will see their credit rating affected as a result. Second, I am also changing the terms of our other loan schemes. More than 60,000 small and medium sized businesses have now taken out coronavirus business interruption loans.

To help them, I plan to extend the government guarantee on these loans for up to 10 years, making it easier for lenders to give more people more time to repay. I am also extending the deadline of all our loan schemes to the end of this year. And we are starting work on a new successor loan guarantee programme set to begin in January. Third, I want to give businesses more time and flexibility over their deferred tax bills. Nearly half a million businesses deferred more than 30 billion pounds of VAT this year.

On current plans, those payments fall due in March. Instead, I will allow businesses to spread that VAT bill over 11 smaller repayments with no interest to pay. And any of the millions of self-assessed income taxpayers who need extra help can also now extend their outstanding tax bill over 12 months from next January.