Sunak set to introduce Tier 2 finance support

By Finn Scott-Delany

- Last updated on GMT

Sunak set to introduce Tier 2 finance support

Related tags Chancellor Restaurant Coronavirus lockdown Government

Chancellor Rishi Sunak is expected to announce new financial support for hospitality businesses in areas operating under Tier 2 Coronavirus restrictions, such as London and Birmingham.

He is expected to boost the Job Support Scheme (JSS) for businesses in the 'high' alert level, who have complained they have the 'worst of both worlds' with onerous restrictions but no additional funding.

One form of state support for businesses in Tier 2 could involve reducing employers’ contributions to the wages of employees whose income is partly subsidised by the JSS.

In Tier 3 areas, the Government will pay 67% of affected workers’ wages, up to £2,100 a month, under the JSS from 1 November, with some workers also able to claim Universal Credit.

But in Tier 2 regions, the only help available will be the standard JSS, which is meant to support 'viable' jobs only, requires employees to do at least a third of their normal hours, and demands a much larger contribution from employers.

Another plan under consideration is extending the eligibility for business grants, which are currently only available to businesses ordered to close altogether. These are worth £1,500 every three weeks for larger firms, and £1,000 for smaller ones.

Trades unions and the UK’s five big employers’ organisations have been summoned to the Treasury this morning (22 October) to hear details of the plans before Sunak makes a statement to MPs.

Ministers are particularly concerned about the hospitality industry in London, which accounts for almost a quarter of the UK economy and is currently in Tier 2, but will not want to be seen to favouring the capital at a time when north-south feelings in England are running high.

Paul Johnson, director of the Institute for Fiscal Studies, told the BBC it was 'one of the oddities of the system' that pubs and restaurants in Tier 3 areas, which had been forced to close, were in a better position than those in Tier 2 areas, which remained open.

“You get full support, whereas if you’re in tier two, you get no more support than similar businesses in the rest of the country and yet demand for your products is clearly massively reduced,” he said.

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