What does the new Job Support Scheme and other announcements from the chancellor mean to car dealers?

Time 2:55 pm, September 24, 2020

Chancellor Rishi Sunak has taken the wraps off a series of measures to help employers and employees.

Among them are a new Job Support Scheme replacing the soon-to-end furlough scheme and changes to business loans and VAT repayments.

You can read more about the announcement here, but Car Dealer wanted to know exactly what Sunak’s speech meant for motor retailers.

Lawgistics solicitor Nona Bowkis and ASE Global’s chairman, Mike Jones, speak in depth about the news in the video above, but here is a summary of the headline changes.

What is the Job Support Scheme and does it replace the furlough scheme?

It’s a new scheme brought in after the government was receiving pressure to extend the original furlough scheme or bring in a replacement, especially with the threat of a second national lockdown causing huge difficulties just as the original scheme ended.

‘Employers can bring people back from furlough and as long as they work for a third of their working hours, which the employer will pay for, the remaining two-thirds will be paid by the employer and the government,’ says solicitor Nona Bowkis, from Lawgistics.

‘They have to be employed as of yesterday, it’s for small and medium-sized businesses. Large businesses over 250 staff probably are not eligible unless their turnover starts to drop and it’s across the whole of the UK.’

How new is the Job Support Scheme?

It’s brand new, and is open to employers whether or not they’ve used the furlough scheme.

‘It’s more open, fairer and not too dissimilar to the flexible furlough that’s currently live,’ says Bowkis. ‘Importantly, it’s for six months, so employers will also get the £1,000 job retention bonus that’s coming at the end of January.’

Will this help car dealers?

Any support is good but many car dealers have already made their decisions about which of their staff to keep and which staff they have to make redundant.

‘I’m unsure how much of a difference it’ll make but it’s there and if we do go into a heavier lockdown it will come into play,’ says Bowkis.

For viable jobs, this means there will be continual support, says ASE Global chairman Mike Jones.

‘I think for the people who are still on furlough it’s going to be a really difficult decision. For motor retailers, I think it will continue to support them over the next six months.

‘I still think that employers will take a hard look at whether jobs are viable in the long term, and so I think we will still see redundancies in the sector as employers look at their medium-to long-term plans and decide whether they need that particular employee or reallocate these hours across existing people and increase efficiencies.’

What’s this about deferred VAT and will it help car dealers?

Yes, it has the potential to be a real lifeline.

‘The VAT businesses deferred in Q1 this year was due for Q1 next year,’ says Jones, ‘and that would have been a big cashflow headache for many, many businesses, just as they would have been generating cash and then they’d have a big VAT bill from the previous year.

‘This was particularly so for car dealers where March is a challenging time for cashflow anyway. This can now be spread over 11 months, interest free and makes it an awful lot more manageable.’

What about loan schemes?

Business interruption loans have been available during lockdown but the application period was due to end in September. Applications can now be made up until the end of November, as they can with all coronavirus loan schemes.

The repayments can be spread over 10 years rather than six, which will roughly halve the monthly amount paid by businesses, said the chancellor, and business owners can go interest-only on the loans if they get into real trouble.

‘Again, the chancellor is thinking long-term and we’re going to have a much slower runout of this virus than previously thought,’ says Jones.

What happens after Christmas? 

A new loans scheme will be unveiled in January, but there are no details on that as of yet.

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In fact, the details included in the chancellor’s speech on September 24 haven’t been made clear at the time of publication the same day, so the finer points will come to light during October, particularly as the old furlough scheme comes to an end.

What else did the chancellor announce for small businesses?

Job Support Scheme to replace furlough to help people in viable jobs and will run for six months

James Batchelor's avatar

James – or Batch as he’s known – started at Car Dealer in 2010, first as the work experience boy, eventually becoming editor in 2013. He worked for Auto Express as editor-at-large and was the face of Carbuyer’s YouTube reviews. In 2020, he went freelance and now writes for a number of national titles and contributes regularly to Car Dealer. In October 2021 he became Car Dealer's associate editor.

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