Next's director general warned the UK economy not to become "addicted" to government documents – as bosses give their verdicts on Rishi Sunak's £ 9 billion program that "will not stop the downsizing".
Lord Simon Wolfson welcomed Rishi Sunak's new Job Retention Scheme, saying it was time for companies to pay more for wages.
The Chancellor said the Jobs Support Scheme (JSS), a form of wage subsidy, would be introduced after the vacation ends at the end of next month – and last until May.
It could benefit millions, but is far less generous than the vacation program – the state contribution drops from 80 percent of an employee's wages to a maximum of just 22 percent.
Lord Wolfson said that Next, which has around 10 percent of its employees on vacation, may not even need to use the system.
Rishi Sunak has announced a new job retention program that will run until May next year and reduce the government's contribution from 80 percent to a maximum of 22 percent
Around 10 percent of Next's employees are currently on the government's vacation program, which expires next month
Lord Wolfson told the BBC: “We don't think we need it, but we do believe that there are other sectors that are urgently going to do it.
& # 39; It seems like a very reasonable plan to me. I think it is important that employers start paying a little more for the systems and that workers get a little less – otherwise I think there is a risk that our economy will simply become dependent on it. & # 39;
Despite the warning that retailers could find themselves in an awkward position in the coming months, Lord Wolfson was optimistic about the future.
The next boss, Lord Wolfson, warned the UK business community not to indulge in government handouts but welcomed the recent announcement by Rishi Sunak
He said, "We believe that by the end of October there will be enough work to keep all the people we currently have on vacation."
As a result of Mr. Sunak's new system, employers may have to give up more than half of the wages of their employees – even though they may only work a third of their hours.
The CBI hailed the program last night as a “bold move” that would help reduce the “scar effect” of unnecessary job losses on the economy.
The companies' loan agreements have been extended
The Chancellor announced yesterday that small businesses will have more time to repay government-backed loans as part of a "Pay as you grow" program.
Companies that have taken out a coronavirus bounce back loan are given several years to repay and defer their tax burdens.
Rishi Sunak said these companies have the right to suspend repayments for up to six months without affecting their creditworthiness.
"Right now, companies need every extra pound to protect jobs instead of paying back loans and tax deferrals," he told MPs.
Nearly 1.3 million companies have borrowed £ 38 billion through the bounce-back loan program since May, which is a major lifeline for some as the business has dried up.
These companies are now given ten years to repay the loans of up to £ 50,000. This is an increase over the previous six-year terms.
However, other corporate groups and bosses warned that this was nowhere near enough to prevent a wave of layoffs this fall when the vacation ends.
The Ministry of Finance estimates that between two and five million people will be admitted. At the high end, the program could cost £ 9 billion over a six month period.
The Institute for Fiscal Studies (IFS) also warned that it was "far less generous" than vacation, which cost about £ 6 billion a month, compared to the £ 300 million cost of this system if a million workers took it to take.
Yesterday, Mr. Sunak told MPs that the vacation program could not continue indefinitely and that he could not commit to saving every job – suggesting that many would lose theirs once the JSS arrives.
The Chancellor said the JSS would "directly support workers' wages and enable companies under pressure to keep employees in shorter hours instead of firing them."
In his statement, Sunak said the economy "is likely to see more permanent adjustment," adding, "The sources of our economic growth and the types of jobs we create will adapt to the new normal and evolve."
However, Jane Pendlebury, director of the Hospitality Professionals Association, said, “The latest moves, while supportive, don't go far enough as the industry is really on its knees.
"We are happy about the implementation of the Job Support Scheme … but it will not prevent major job losses."
Unlike the vacation program, which protected all jobs, the JSS will only create “viable” jobs – that is, employees must work at least a third of their working hours to qualify.
An employee who does a third of his working time is paid by his employer as usual.
Carol Stewart, 62, will no longer be fired by her son under the Chancellor's Job Support Scheme
In addition, they receive two thirds of the remaining wages.
Half of this top-up payment is paid by the employer and the other half by the government.
Overall, this means that the person receives almost 78 percent of their original wage, with 55.5 percent coming from the employer and 22.2 percent from the state. These percentages change as a person works more hours.
MEPs' fears for the arts sector
The arts sector faces a "bleak future" of unprecedented layoffs despite the new job support system, Tory MPs have warned.
The sector has been one of the worst hit by the pandemic as all live performances have been suspended.
Almost half of all artists have been on leave, and many could lose their jobs at the end of the program next month.
Digital, Culture, Media and Sport Selection Committee Chairman Julian Knight welcomed the new program last night but added: “There are still many hundreds of thousands of workers in the events, arts and culture of business with a bleak future.
"The job support program may not prevent unprecedented layoffs and many organizations from becoming extinct."
For example, those who work half their hours get 83 percent of their wages, while the government sets 17 percent.
All companies with 250 or fewer employees are entitled to the wage support plan, which starts in November and lasts for six months. Larger companies, however, have to show that their profits have been affected by the pandemic.
Payment is based on an employee's normal salary with a government contribution cap of £ 697.92 per month.
After three months, the government can increase the minimum number of hours required for qualification.
Eligible employees must have been on the payroll since at least September 23.
However, the Treasury rules state that workers cannot be laid off or terminated while applying for a grant to the Jobs Support Scheme on their behalf.
As with the vacation program, employers are reimbursed by the government after the job is done.
Employers who continue to employ their employees to benefit from the program will also receive the £ 1,000 job retention bonus.
Dame Carolyn Fairbairn, Director General of the CBI said, "These bold moves by the Treasury Department will save hundreds of thousands of viable jobs this winter."
However, Paul Johnson, director of the Institute for Fiscal Studies, said, "If the vacation program expires, it will likely lead to a sharp rise in unemployment."
Bank of England chief economist Andy Haldane told ITV Tonight yesterday that "long-term scars" could remain in the economy if people stayed unemployed for too long due to the pandemic.
Thank you Rishi, but that is nowhere near enough
By Miles Dilworth Money Mail Reporter
Peter Hall Peter Hall, 72, runs the Farlam Hall Country House Hotel in Brampton, Cumbria with his wife Bb, 67
A luxury The hotel manager said the chancellor's VAT break was "nowhere near enough" to offset new restrictions in the hospitality industry.
Peter Hall, 72, who runs the Farlam Hall Country House Hotel in Brampton, Cumbria with his wife Bb, 67, praised Rishi Sunak for his generosity.
Hall said the VAT cut from 20 percent to 5 percent, which began in July, has enabled the hotel to offer "better deals than ever".
He welcomed the news yesterday that the break would be extended to March 31st. However, he said Boris Johnson "effectively canceled Christmas" by capping numbers and the 10pm curfew.
And under the Chancellor's Job Support Scheme, Carol Stewart no longer needs to be fired by her son.
Ms. Stewart, 62, works for travel goods company OneNine5, which was taken on leave by son Alex, 31, in March – and faced a possible layoff when the program ends in October.
Ms. Stewart, of Garstang, Lancashire, said she felt "nervous" about her job security before yesterday.
However, the plan to subsidize the pay of employees who work fewer hours than normal means she can get back to work.
How on earth do we pay the bill? Rishi Sunak is now trying to achieve a difficult balancing act, writes RUTH SUNDERLAND
Relapsing into lockdown has given the Chancellor an almost impossible task.
Previous rescue packages were based on the hope that we will now emerge from the Covid crisis and get back to normal.
Instead, Rishi Sunak tries to create a devilishly difficult balancing act.
His goal is to wean companies off the hugely expensive vacation program that has artificially kept many afloat and supported zombie jobs.
He must contain the tide of tax money pouring out of the coffers and stave off the worst peacetime budget crisis in modern history.
At the same time, he wants to protect viable jobs with short-term help.
Chancellor Rishi Sunak with Frances O & # 39; Grady, Secretary General of the TUC, and Dame Carolyn Julie Fairbairn, Director General of the CBI
What are the measures, will they work and the all-important question: how in the world are we going to pay the bill?
The national debt is £ 2 trillion. This is evidence of Mr. Sunak's proficiency and sangfroid that he has spawned an optimism that we can thrive if only we learn to live with the virus.
The heart of the winter management plan is the Job Support Scheme. Billed as the successor to the vacation, the company is set to support companies that are facing a drop in demand due to the virus.
It also ends the undesirable element of vacation where millions of workers have been paid by taxpayers to do nothing.
The new system is much less generous. First of all, nobody is paid to remain completely inactive: they are only available to employees who plan at least a third of their normal working hours.
As usual, employers pay full wages when employees are on their posts. You also pay a third of the bill when people aren't working and the government pays another third.
Unfortunately, employers are far worse off than on vacation and in the insidious position of having to pay employees' wages for their free time when they are not producing.
The system is meant to be temporary and certainly could not be sustained in the long term.
Paying wages in return for zero productivity would torpedo any bottom line.
A recently closed House of Fraser store on Richmond High Street in London
Employees are also out of their own pockets, unless their company pays the remaining third of their normal salary.
Yes, it's better than not having a job at all, but it also means lower purchasing power and confidence, which will hold back economic recovery.
And it may not be possible to tell the difference between a "viable" and an "unprofitable" job. It seems inevitable that, like on vacation, many companies will have to sign up for support and fire people anyway.
In already heavily stressed sectors such as retail and hospitality, there must be serious doubts as to whether companies can afford to participate.
Many companies have already started redundancy consultations and it is doubtful that this will be enough to make them wear off.
The Chancellor did not provide a cost for the Job Support Scheme, but it is clear that it is far less generous than vacation.
The grant is roughly 22 percent of a worker's wages when they work only one-third of their normal hours, compared to 80 percent under the vacation program when it was first used.
That is a huge additional expense for employers. In other words, independent economists estimate that the bill for the new measure could add up to around £ 3 billion, which sounds like a lot, but is only a fraction of the £ 35 billion vacation paid so far.
The self-employed will also reduce their aid in the coming months.
The Chancellor did not list any costs for the Job Support Scheme, but it is clear that it is far less generous than vacation
Measures include extending the temporary VAT cut for hospitality and tourism to the end of March next year, which is welcome and boosts cash flow.
Companies that have taken out subsidized emergency loans are given longer time to repay them.
The duration of these loans has been extended from six to ten years, which drastically reduces the monthly repayments.
The problem is that companies will be burdened with debt longer, which means they will have less headroom for future investments and will weigh on the economy for years to come.
None of this means that the Chancellor did the wrong thing. He was right to start a giant business lifeboat in the spring, and he is right to extend another helping hand now.
As painful as it may be, businesses and individuals need to be weaned from the extremely generous programs on offer so far.
Some will inevitably hit the wall, which is terrible for those affected. However, the Chancellor is not concerned with illusory magical money trees: he wants to help companies with strong roots and real growth prospects to grow.
He can't bear to write blank checks until a vaccine arrives, if it ever does.
Public finances are already torn to pieces.
Government borrowing is projected to reach £ 300 billion this year. Following yesterday's announcements, some economists are forecasting an increase to £ 370 billion.
One small consolation is that we are fortunate enough to have responded with strong public finances.
And the surge in borrowing, while the bleak numbers look alarming, is actually not an issue that is imminent. Interest rates are low, our national credit is good, and the Bank of England can still print money.
However, ominously, Mr. Sunak has indicated that in the future he will make "difficult decisions", ie tax increases and spending cuts.
But we cannot tax a battered economy healthy again. An ax for government spending, although desirable for other reasons, will not lead to an outbreak of prosperity either.
We have to grow out of trouble. That means learning to live with the virus, opening up the economy and overcoming our fears.
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