Covid: Support for businesses and workers in Tier 2 - who is eligible and how do I apply?

  • Video report by ITV News Correspondent Neil Connery

Chancellor Rishi Sunak announced on Thursday a support package for businesses affected by high-level Covid restrictions.

He also announced a more "generous" Job Support Scheme for workers and more help for the self-employed.

Here's what you need to know:

What grants are available for businesses?

Cash grants of up to £2,100 per month will be made available to businesses in England which have been adversely affected by local Tier 2 restrictions.

The additional funding will be allocated to local authorities placed on the high-alert tier to help them support businesses which are severely impacted by the restrictions on socialising.

Grants will be available retrospectively for areas who have already been subject to restrictions and come on top of higher levels of additional business support for areas moving into Tier 3.

The move could be worth more than £1 billion.

Who can apply?

The grants are primarily aimed at businesses in the hospitality, accommodation and leisure sector in England that are adversely impacted by restrictions.

This includes hotels, B&Bs and restaurants which may remain open but have experienced a reduction in takings due to a restrictions on households mixing, as well as those legally forced to close.

The Treasury estimates that 150,000 business will be eligible to apply.

How will the grants be calculated?

The funding each local authority receives will be calculated based on the number of eligible businesses (hotels, B&Bs, leisure centres, restaurants) in their area.

How much will businesses get?

Local authorities will receive a funding amount based on the rateable value of the businesses in their area:

  • Firms with a rateable value of £15,000 or under will be allocated grants of £934 a month.

  • Those with a rateable value of between £15,000-£51,000, will be allocated grants of £1,400 a month.

  • Businesses valued at £51,000 or more will be allocated of £2,100 per month.

The grants are equivalent to 70% of the amounts given to legally closed businesses (worth up to £3,000/month).

Businesses who have seen an impact on takings due to Covid may be entitled to cash grants. Credit: PA

How do businesses apply for a grant?

The Treasury has said it will be up to local authorities to determine which businesses are eligible for grants and how much can be allocated.

It is not yet clear when businesses will be able to apply for a cash grant and may differ between local authorities.

Mr Sunak said: "It will be up to local authorities to decide how best to distribute these grants giving them the necessary flexibility to respond to local economic circumstances.

"But I'm providing enough funding to give every business premises in the hospitality, leisure and accommodation sectors a direct grant worth up to £2,100 for every month Tier 2 restrictions apply."

However, the grants will be calculated retrospectively and cover every month that Tier 2 restrictions were in place backdated to August.

The move to make the payments retrospective is aimed at heading off criticism from areas of northern England which have been under restrictions for months.

What about other businesses?

The scheme only covers three sectors - accommodation, hospitality and leisure, meaning some businesses - such as performance venues - may miss out.

However, local authorities will also be allocated a 5% top up amount to the grants to cover other businesses that might be affected by the local restrictions, but which do not "neatly fit into these categories", the Treasury said.

The Job Support Scheme has become 'more generous', according to the Treasury. Credit: PA

What support is there for staff?

The Job Support Scheme, which Mr Sunak announced as part of his Winter Economy Plan to replace the current furlough system, will be "more generous", the Treasury says.

Instead of only being open to people in “viable” jobs working a third of their normal hours, it will now cover employees doing just 20% of their usual work. This means that staff working just one day a week will be eligible for the scheme.

The amount that employers are required to pay to top up their wages has also been reduced to just 5% of unworked hours, down from 33%.

This means that if someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer only £44.

Employers will continue to receive the £1,000 Job Retention Bonus. The Job Support Scheme for businesses legally required to close remains unchanged.

When does the Job Support Scheme start and what will staff be paid?

The Job Support Scheme starts from November 1, when the current furlough system ends, and will continue for six months.

Employees from all nations of the UK are eligible and payments will equate to up to two-thirds of their usual salary.

The government will double the maximum payment cap set out under previous rules from £697.92 to £1,541.75. The cap is set above median earnings for employees in August at a reference salary of £3,125 per month.

For example, a full-time employee in the hospitality industry paid an average of £1,100 per month will take home at least £807 a month. Their employer will pay £283 a month and the government will pay the rest.

The government will provide two more grants for the self-employed whose trade has been affected by Covid restrictions. Credit: PA

What about the self-employed?

The government will provide two taxable Self-Employment Income Support Scheme (SEISS) grants to support those experiencing reduced demand due to coronavirus but are continuing to trade, or temporarily cannot trade.

The amount covered by grants increase from 20% of profits to 40%, meaning the maximum payout will increase from £1,875 to £3,750.

This will amount to a potential further £3.1 billion of support to the self-employed through November to January, with a further grant to follow covering February to April.

It will be available to anyone who was previously eligible for the SEISS grant one and grant two, and meets the eligibility criteria.

Grants will be paid in two lump sum instalments each covering three months.

The first grant will cover a three-month period from the start of November 2020 until the end of January 2021. The government will pay a taxable grant which is calculated based on 40% of three months’ average trading profits, paid out in a single instalment and capped at £3,750.

The second grant will cover a three-month period from the start of February until the end of April 2021. The government will review the level of the second grant and set this in due course.

What has been the reaction?

Mr Sunak’s decision to make the business grants retrospective came after criticism from northern leaders about why extra support was only being announced after London moved into Tier 2.

Greater Manchester Mayor Andy Burnham, who was involved in a bitter wrangle with the Government over his region’s move to Tier 3, said: "Why on Earth was this not put on the table on Tuesday to reach an agreement with us?

“I said directly to the PM that a deal was there to be done if it took into account the effects on GM businesses of three months in Tier 2.”

Shadow Chancellor Anneliese Dodds also criticised Mr Sunak's announcement branded it a "last-minute move".

She suggested the chancellor has only "caught up and listened to the anxiety of workers and businesses when it looks like [Tier 2] restrictions will be affecting London and the West Midlands".

Ms Dodds argued that that regions like the North have been under restrictions for weeks and seen "their businesses slip through their fingers".

She added that the Chancellor's previous business support plans had been a "patchwork of poor ideas rushed out at the last minute".

Explaining why he has been forced to introduce extra measures just weeks after setting out his Winter Economy Plan, Mr Sunak told MPs that even businesses which can stay open are facing “profound economic uncertainty”.

The chancellor said hospitality industry chiefs have given a clear message that “the impact of the health restrictions on their businesses is worse than they hoped”.

He said: “I’ve always said that we must be ready to adapt our financial support as the situation evolves, and that is what we are doing today.

“These changes mean that our support will reach many more people and protect many more jobs.

“I know that the introduction of further restrictions has left many people worried for themselves, their families and communities.

“I hope the Government’s stepped-up support can be part of the country pulling together in the coming months.”