David Logan of business advisory specialists Oak Team Associates gives his take on what JSS Closed and JSS Open means to the licensed trade.
There have been further updates to the Job Support Scheme, some relatively positive, some missing the point and others that pose a substantial problem to business cashflow.
To begin with, let’s recap on the scheme. There are two versions as of 1 November. The easiest one to explain is “JSS Closed”. Under that version, staff from closed businesses get paid two-thirds of their pre-lockdown average wages. The grant covers that, with the exception of Employer’s NIC and Employer’s pension contributions, which the employer still has to fund. There is no “top-up” (as there is now between the 60% grant and 80% entitlement).
JSS Open is a bit more convoluted. Firstly, to qualify, the employee has to work at least 20% of their pre-lockdown average hours. For the hours worked, they get paid in full. For the hours they don’t work, they get paid two-thirds of the difference. The grant covers 61.67% of that, and the employer covers the other 5%, plus Employer’s NIC and Employer’s pension contributions.
In both cases, the employee only gets 66% of wages for hours “lost”, as opposed to 80% under the Job Retention Scheme. Got that? Okay, let’s move on…
Let’s take the positive first. If your business can operate, but is solely restricted to takeaway and delivery, or can only serve food and drink outdoors, you can claim the Closed grant. Staff in those situations are broadly covered for two-thirds of their wages.
Then there’s the missed point. What if you are technically allowed to open, but the restrictions are such that there’s no commercial logic in doing so? The easiest example is a wet-led pub that can only open to 6pm and cannot sell alcohol. Unless you live in an area of early-rising Irn Bru addicts, who need to use your pub as their safe consumption room, you won’t want to open your doors. As it stands, if you choose to stay closed, there’s no entitlement to either Open or Closed grant support. You would have to be open long enough for staff to work the 20% minimum hours to get the balance under the Open grant. This has to be reviewed at government level.
And then there’s the cash flow conundrum. The latest release says that you can’t claim the grant until you have paid the relevant sums to your employees. I know that some businesses in the past waited for money to come in before paying it out, as they simply didn’t have the funds to pay in advance. This latest version technically means businesses can’t do that. Whether HMRC will ask for proof of payment before processing the grant remains to be seen, but I suspect they will add a question to the claim process that asks for confirmation that the employees have already been paid.
The inclusion of that clause is bad enough. But it gets worse. The first claims under the new scheme cannot be submitted until 8 December. That means payments won’t hit bank accounts until 15 December, a full six weeks after the schemes come into effect. That is nothing short of a national disgrace. Businesses must make suitable representations to councillors, MPs, MSPs and the like. Forcing the cash burden onto those who have been hardest hit by the restrictions is the clearest example of the understanding gap between business and government.
Maybe the rules will change in the next few days (they can do so at a moment’s notice). Right now, being in Level 4 lockdown doesn’t seem as bad as it did last week. At least you would know where you stood on grant support. Everyone else is fumbling in the dark.
David Logan, Oak Team Associates Limited