WATCH: Payroll scheme to be phased out until March

Friday 31 July 2020

The co-funded payroll scheme will be phased out from September 2020 until March 2021, Ministers have announced.

The initiative - which sees the government pay 80% of an employee's wages, up to £1,600 per month - launched in the early stages of the pandemic to help keep thousands of islanders in jobs.

It was due to end in August, but Ministers have now announced plans to continue it until March 2021, gradually reducing government input.

The scheme is estimated to have cost government £93m by the end of August, while the tapering of the scheme is estimated to cost between £26m and £53m, bringing the estimated total to be between £108m and £137m, which is within the original predictions of the government.

Pictured: How the tapering will work.

The move was announced by the Economic Development Minister and Treasury Minister at a press conference this morning.

“The extension to our payroll scheme will help to maintain the protection of jobs throughout the winter months. We are also fulfilling the government’s commitment to avoid a cliff-edge end to financial support.   It is essential to provide businesses with the certainty of a continuing subsidy, to allow them to plan ahead as trading adapts and the economy begins to recover,” Senator Farnham said. 

Deputy Pinel added: “As well as extending the scheme, we are also lowering the detriment test from 30% to 20%. This means businesses will only need to show a 20% reduction in income and it will allow more businesses to qualify for support. This will aid economic recovery and share financial support across a wider business base, as subsidies reduce and economic activity returns. 

“There will be no change to eligibility, but businesses will be able to claim for new or different employees, if those employees were Registered or Entitled to Work and on any payroll in March. Funding for the scheme has been confirmed by the Treasury until at least the end of December and, subject to approval of the new Government Plan by the States Assembly, until March 2021.”

Pictured: There are currently no plans to extend the scheme beyond March for the hospitality.

While there are currently no plans to extend the scheme beyond March for the hospitality or any other sectors, Senator Farnham said Ministers will keep reviewing it. 

He also assured there will be additional support for the hardest hit sectors, which include hotel accommodation, visitor attractions and event planners.

When questioned about why the Government had decided to gradually reduce the support given to businesses, Deputy Pinel said it would have been unsustainable for the Government.

in addition, Senator Farnham said the Government does not want businesses to become reliant on the support as it would "restrict their ability to plan ahead".

As such, businesses will be required to return to "broadly normal working pattern to be eligible", instead of remaining closed or artificially restricting their earnings. 

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WATCH: Ministers announcing the move...