Ministers plan to extend payroll scheme until March

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Responding to the Covid-19 crisis, in March the government launched the co-funded payroll scheme, under which it agreed to fund 80% of employee wages up to a maximum of £1,600 for firms which were losing 30% or more of their turnover.

Many businesses were forced to close their doors during the lockdown and many have been operating under strict physical-distancing guidelines since.

The second phase of the payroll scheme, which is currently in place, is due to expire on 31 August but yesterday Economic Development Minister Lyndon Farnham and Treasury Minister Susie Pinel announced a ‘phase-three’ extension, which will run from September 2020 until 31 March 2021.

Under phase three, the level of subsidy provided by the government will be gradually reduced, dropping to 60% in September, 40% in November to 30% in January and then to 20% for the final month of March, with ministers aiming to avoid a ‘cliff-edge’ where support is suddenly cut off.

The detriment level required to qualify for the scheme will also drop to 20%, effectively broadening eligibility, and will remain at that level until March. There will be no change to eligibility for the scheme by sector, with most types of business still able to apply.

Businesses will also be able to claim for new or different employees, if those staff are entitled, entitled to work or were employed in March under registered status.

So far funding for the scheme extension has been approved until the end of the year but the States will be asked to support it for a further three months when the updated Government Plan is debated later this year.

Senator Farnham said: ‘The co-funding scheme was launched in March and has evolved significantly since then.

‘Ministers and officials have been closely monitoring its impact, adjusting guidance and improving the support accessibility for as many businesses as possible. We want that support to continue.

‘So today the co-funded payroll scheme will be extended from the end of August, on a reduced-scale handle through until the end of March 2021. This decision delivers on the government’s commitment not to allow a cliff edge, or sudden end to the financial support, and will provide much needed certainty to allow businesses to plan ahead.’

Deputy Pinel added: ‘[By the end of March], it is estimated that the total scheme will have provided almost £140 million into financial support for local businesses.

‘This makes Jersey’s payroll scheme one of the most comprehensive in the world and is more substantial than similar support provided in most other jurisdictions.

‘Notably there’s more support than was made available under the UK furlough scheme and job-retention bonus. It is designed to give businesses the certainty of some continuing economic subsidy from the government as gradual economic activity returns and trading adapts to a new normal.’

From this month, to be eligible for the scheme, businesses will be required to return to broadly normal trading patterns in line with health advice, not to remain closed if it is safe to open, and not to artificially restrict their revenue by some other means.

By the end of this month, it is estimated that the co-funded payroll scheme will have cost £93 million, compared to the budgeted £138 million.

Ministers will continue to monitor the scheme and could adapt it depending on how well the virus outbreak is contained and businesses are affected.

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