New jobs protection and creation schemes

New jobs protection and creation schemes – the key messages

Caroline Harwood, Partner, Head of Share Plans and Employment tax
New jobs protection and creation schemes

In today’s Summer Statement, Rishi Sunak explained that we are now entering the second element of his three-phase “Plan for Jobs”.  

The key initiatives comprised in the second phase, while temporary, are intended to support the UK’s economic recovery and are as follows:

  • a new Job Retention Bonus to encourage firms to keep on furloughed workers and bring them back in to the work place
  • a Kickstart scheme to support jobs by providing direct help to find work and to gain the necessary skills
  • a focus on protecting jobs in the hospitality and accommodation sectors as well as attractions which have been particularly hard hit by the pandemic. This is done by supporting demand for their services and increasing business confidence
  • action to activate the property market, to promote infrastructure investment, and to make homes greener, warmer and cheaper to heat thus creating more jobs in this sector.

This note focuses on the first two of those changes which will directly affect employers generally and sets out the support available.

The future of the Coronavirus Job Retention Scheme (CJRS)

To date approximately 1 million businesses have furloughed more than 9 million jobs through CJRS. This represents more than a quarter of the UK workforce during a period in which the economy contracted by 25%.

While Mr Sunak has famously declared that not every job can be saved, he said today that he will “never accept unemployment as an unavoidable outcome” and recognised that the job of protecting employment has only just started. However he made it clear that the CJRS would not be extended beyond the existing end date of 31 October 2020. 

For more information on the furlough scheme, read our insight article.

New Job Retention Bonus

Instead the new ‘Job Retention Bonus’ (JRB) scheme will be introduced at an anticipated cost to the Treasury of £9.4 billion.  This is anticipated to be the most expensive element of the package of support measures to be included in phase two.  

Under the JBR:

  • £1,000 will be paid to UK employers for each furloughed employee who is continuously employed to 31 January 2021 
  • relevant employees must earn above the Lower Earnings Limit (£520 per month) on average between 31 October 2020 and 31 January 2021
  • payments under the scheme will be made from February 2021.

Further information will be published by the end of July.

New Kickstart scheme

Under the Kickstart scheme the government will pay young people’s wages for up to six months representing a grant worth around £6,500 per young person. This sits alongside an expanded Youth Offer delivered via DWP. Initial funding of £2bn is available now with no cap on the number of places to be funded.

The scheme will cover:

  • six month work placements 
  • for those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment
  • funding will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance Contributions (NICs) and employer minimum automatic enrolment contributions.

Support for new traineeships and apprenticeships in England

The government will also provide an additional £111 million this year for:

  • traineeships in England for 16-24 year olds providing work experience
  • at a rate of £1,000 per trainee.

Eligibility will be extended to those with Level 3 qualifications and below.

Employers in England who hire new apprentices will receive a payment of:

  • £2,000 for each new apprentice aged under 25
  • £1,500 for each new apprentice aged 25 and over
  • hired between 1st August 2020 to 31st January 2021. 

These payments will be in addition to the existing £1,000 already paid in respect of new 16-18 year-old apprentices, and those aged under 25 with an Education, Health and Care Plan.

For more information, please contact Caroline Harwood or your usual Crowe contact.

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Caroline Harwood
Caroline Harwood
Partner, Head of Share Plans and Employment Tax