Expert opinion: Does Rishi's Job Support Scheme do enough?
Dr Maria Rana, lecturer in economics and finance from the University of Salford Business School, comments on Chancellor Rishi Sunak’s recent Job Support Scheme statement.
Dr Maria Rana said "The Chancellor has announced new measures intended to support businesses and the economy during these unprecedented times of the Covid-19 pandemic.
"According to the Business Impact of Coronavirus Survey (BICS), 10% of workers were still on furlough leave, while 11% of businesses were at moderate or severe risk of insolvency at the beginning of September. Additionally, in the weeks between 24th August and 6th September, only 84% of businesses were trading, with smaller businesses less likely to have been trading than larger businesses (Office for National Statistics).
"The new measures come within this context, after the announcement of new national coronavirus restrictions and one month before the end of the furlough scheme. So, did the Chancellor go far enough?
"As part of the new measures, businesses will have up to ten years to repay their bounce back loans, with the possibility of interest-only repayment periods as well as payment holidays. Considering the fact that over 1.17 million ‘bounce back’ loans have been approved for small businesses since the beginning of the scheme in May, the news will be welcomed by many.
"As largely anticipated, from 1st November 2020 and for six months afterwards, the Job Retention Scheme (furlough) will be replaced by a new one: the Job Support Scheme, which pays some employees’ wages as long as they are working at least one third of their normal hours. This is much less generous than the furlough scheme, and even if it can be used in conjunction with the job retention bonus announced in the summer, it will not be sufficient to stop mass redundancies especially within those sectors that have not returned to trade. Additionally, it only lasts six months, so some jobs might be kept alive by this scheme but only for six months.
"Even if we can appreciate the honesty of the recurring statement that 'not every business and every job can be saved', we would however expect the Government’s commitment to save as many businesses and jobs as possible. These latest measures do not seem to reflect such a commitment."
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