Skip to content

New Government Bail-Out Aimed at Tier 2 Businesses and More

Rishi Sunak has announced another huge financial package aimed at helping struggling businesses to make it through the pandemic. This time, the main idea is to help businesses that are open in the Tier 2 region and that need support.

Full Details

One key point here is that the Job Support Scheme (JSS) that is due to begin in November will be broadened. It is now going to be available to every company in the UK that remains open. In addition, the employees on this scheme can now work only 20% of their normal hours instead of having to complete a third of them.

Businesses who take part in the JSS are now being asked to contribute only 5% of the unworked hours, as well as paying the hours that are worked. In total, someone who works one day a week rather than their normal five can still get paid over 73% of their regular wages.

The cost of the JSS programme is still unclear, as it will be down to the amount of demand that exists for it. However, sources have already confirmed that it will run into the billions of pounds.

Another element of the new bail-out is the introduction of increased grants for self-employed workers. This will cover 40% of average profits and the maximum goes up to £3,750. This scheme is expected to cost £3.1 billion and it could rise to double that figure if it is needed until April next year.

Companies in Tier 2 areas will also be able to claim grants running up to £2,100 each month. This could benefit 150,000 companies, leading to an overall cost for the government of up to £1billion. It will be backdated to cover those businesses in the North that have already started dealing with the new restrictions.

The Growing Cost of Lockdown and the Initial Reaction

The extra billions that the chancellor will pump into these new schemes will see the country´s debt level keep on rising. This comes as new figures reveal that the government is already being forced to borrow £1 billion each day. It is thought that the total cost of the new initiatives announced by the chancellor could be £10 billion or more.

This comes on top of at least £200 billion that has already been used to try and stop the British economy from collapsing since the pandemic began. With many businesses paying collection agency fees to stay afloat, even more spending may be needed.

Sunak was forced into this new cash splurge due to a growing sense of anger at the way the previous packages had left some businesses out in the cold. He pointed out that he made the move after speaking to industry leaders and seeing that more support was needed for companies that are “open but struggling”.

Overall, the new measures were broadly welcomed, particularly in Tier Two regions where the high risk rating has harmed businesses, but where extra financial support for businesses had previously been seen as being lacking.

With 17% of food services and accommodation companies said to now be at risk of going bust, the new measures could throw them a lifeline, but it is clear that the longer this health crisis drags on, the higher the cost to the country will be.