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Financial sustainability Coronavirus

When is a furlough not a furlough?

CFG's Policy Manager Richard Sagar takes a look at the government's new Job Support Scheme and what the new Tiers system could mean for charities.

Post by CFG

In addition to the already announced Job Support Scheme, following announcements on Friday, the Chancellor has now supplemented it for areas where businesses are forced to close, with the government paying two thirds of each employees’ salary (or 67%), up to a maximum of £2,100 a month. It is important to note that employers will be eligible for National Insurance Contributions and pensions contributions.

To many this looks a lot like a less generous extension of the furlough scheme for areas where businesses (and charities) are forced to close. Employees must be off work of a minimum of seven consecutive days, and the scheme will start as furlough closes on 1 November, and will be available for six months. It will be reviewed in January 2021, depending on the current restrictions in place (and one would think the performance of the labour market).

In addition, there is also a slightly more generous grant depending on the rateable value of your property. You are also eligible for payment a week sooner, after only two weeks as opposed to three as it was with the first scheme.

Find full details below:

  • Properties with a rateable value of £15,000 or under will receive grants of £667 per two weeks of closure (£1,334 per month).
  • Properties with a rateable value of over £15,000 and less than £51,000 will receive grants of £1,000 per two weeks of closure (£2,000 per month).
  • Properties with a rateable value of £51,000 or over will receive grants of £1500 per two weeks of closure (£3,000 per month).

HMRC has said there will be more guidance in due course. We will be able to provide an update on this as it becomes available.

What do the new Tiers mean for you?

The prime minister has now set out a new Tiers system to classify pandemic risk areas. Whether you will be eligible for this additional support or not will depend on what level of risk the area in which your charity is based.

The BBC has a useful tool to help determine which tier you are in. Given that the tier system will be reviewed fairly frequently (14 days for high risk locations, and a 4 week sunset clause for interventions in for very high risk areas) it will be prudent to monitor this fairly frequently.

Only time will tell if these further restrictions will be effective at reducing transmission rates, although it seems scientific advisors do have concerns that the measures announced may not be enough.

One important point for those with a charity retail arm, is that retail will not be closed under any of the different tiers. So even in areas deemed very high risk’ charity shops will be able to open, unless local authorities decide to put additional measures in place.

However, this does raise important questions as to how useful the additional measures from the Chancellor will be for many charities. Those charity shops that are able to open may see a very substantial fall in sales, due to a decrease in footfall associated with very high-risk areas and people being encouraged to work from home. Under these conditions, charities would not be eligible for the supplemental Job Support Scheme, even though it is very possible that insufficient income will be generated to make it viable to remain open.

This will be true outside of the retail context also, for different kinds of charities who rely on trading which will see significantly reduced turnover with current distancing requirements (this would include many museums, leisure facilities, theatres etc), and other charities where charity activity will not be able to operate as before, even though they are not forced to close. There will need to be additional support in place for charities in these circumstances, which could include extending the Job Support Scheme to these organisations.

We will shortly be updating the #NeverMoreNeeded Five Point Plan to take account of these recent announcements.

 

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