Chancellor Rishi Sunak announced his Winter Economy Plan in the House of Commons today (September 24) which aims to protect jobs through the difficult winter months of Covid-19. We explain what his announcement means for beauty salons, spas, and mobile and home-based therapists working in the UK.

“The resurgence of the virus [Covid-19] and the measures we need to take in response poses a threat to this fragile economic recovery… but our primary goal remains unchanged – to support people’s jobs, but the way we achieve that must evolve,” said Sunak.

New Job Support Scheme to launch in November

A new scheme has been announced to support the wages of people in work, giving employers who face depressed winter demand the option of keeping people in jobs on shorter hours rather than making them redundant. 

The six-month Job Support Scheme will come into effect from November 1 and will support viable jobs – so employees must be working 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. The employee will keep their job and anyone who as of yesterday is employed is eligible. 

The scheme will run until April 2021 and all small-to-medium-sized businesses are eligible to apply, but larger businesses can only do this when their turnover has fallen. Businesses who have not previously used the current furlough scheme (the Coronavirus Job Retention Scheme), which ends in October, are eligible to apply for the scheme. 

Also, employers retaining furloughed staff on shorter hours can claim both the Jobs Support Scheme and the Jobs Retention Bonus, and this, the Government says, significantly increases the incentives to bring back previously furloughed employees. 

For those mobile and home-based therapists, it’s important to note that the Self-Employed Income Support Scheme is being extended on “similar terms” to the existing job support scheme, although these are less generous than the previous payments.

A first taxable, grant at the start of November will cover 20% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, with a limit of £1,875 in total. The second grant will cover a three-month period from the start of February 2021 until the end of April 2021, but details are yet to be announced.

Other important measures announced in Sunak’s Winter Economy Plan:

• The furlough scheme is definitely coming to an end and Sunak said that this was a hard choice, but that it is “fundamentally wrong” to keep people in unviable jobs. 

• Sunak also announced Vat Deferral – a 12-month interest-free payment plan for up to 500K businesses. Businesses who deferred their VAT will no longer have to pay a lump sum at the end of March 2021. They will have the option of splitting it into smaller, interest-free payments over the course of 11 months. 

• Pay as You Grow scheme – this scheme is for businesses which took Government guaranteed loans during the crisis. “Loans can now be extended from six to 10 years, nearly halving the average monthly repayment,” said Sunak. Business owners can also move to interest-only payments or suspend payments if they are “in real trouble” for up to six months. This also won’t affect credit ratings. 

• Sunak is cancelling the VAT increase for two of the worst sectors affected by the pandemic – hospitality and tourism. VAT was planned to increase from 5% to 20% in January 2021, but for these sectors it will remain at the lower rate of 5% until March 31, 2021. 

• Coronavirus Business Interruption Loans will be extended for up to 10 years.

• There will also be a new loan scheme in January, more information to come. 

Industry reactions:

Hilary Hall, NHBF chief executive, said: “We've been working very hard to get through to the Government that businesses are facing a cliff edge with the furlough scheme coming to an end in October and many businesses still trading well below normal levels. We had been pushing for the furlough scheme and self-employment income support schemes to be extended for sectors such as ours hardest hit by the pandemic. With employers still being asked to foot wage bills despite poor trading, the Job Support Scheme does not go far enough to save jobs for or to save businesses." 

What do you make of the Chancellor’s Winter Economy Plan? Comment below. 

For the latest news and information on reopening your beauty business following the coronavirus lockdown, check out our full Coronavirus Resource Guide for salons and spas.