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Extended government support for hospitality businesses under Tier 2

Published:  22 October, 2020

Rishi Sunak has announced a new raft of support measures in the Commons today (22 October), following a morning meeting with business leaders including hospitality operators.

Recognising that “even business that can stay open are facing profound uncertainty”, the Chancellor outlined “three new steps” to help operators under Tier 2 restrictions.

A new grant scheme is being introduced for businesses impacted by Tier 2 restrictions, with additional funding going to local authorities to provide direct cash grants.

These grants will be distributed at the discretion of local authorities, to “give the necessary flexibility to respond to local economic circumstances”, with provision for funding to “give every business premises in the hospitality, leisure and accommodation sector a direct grant worth up to £2,100 for every month that Tier 2 restrictions apply”.

This will represent up to 70% of the grants available for closed businesses under Tier 3 restrictions (up to £3,000), said Sunak, with businesses under Tier 2 also being able to claim retrospectively, back-datable to August.

A second measure, designed to better protect jobs, will see the job support scheme for employers increased.

Businesses that are legally required to close will be covered for the full cost of two-thirds of the employees salaries, where they can’t work for a week or more.

Sunak added: “For businesses who can open, it is now clear the impact of restrictions on them, particularly in the hospitality sector, is more significant than they had hoped.”

In response, he announced two changes to the short-time work scheme, to help businesses avoid making redundancies.

Employees will now only have to work 20% of their original hours to qualify for the scheme, rather than the original 33%, while the employed contribution for the hours not worked will drop from 33% to 5%.

The scheme will apply to eligible businesses in all alert levels, including those businesses not closed, but facing higher restrictions, said the Chancellor.

A third measure will see an increase in support for the self-employed, with the next round of self-employed income support doubling from 20% to 40% of people’s incomes, increasing the maximum grant to £3,750.