How will the furlough replacement scheme affect designers?

At the end of the month, the government’s Coronavirus Jobs Retention Scheme (CJRS) – otherwise known as the furlough scheme – will end. Taking over from 1 November will be a new support package called the Job Support Scheme (JSS).

The original CRJS was brought in back in March as part of the government’s plan to protect jobs in businesses adversely affected by the ongoing coronavirus pandemic. Initially, it offered workers 80% of their usual monthly earnings and was capped at £2,500 a month, with a similar scheme on offer for self-employed people.

Chancellor Rishi Sunak announced in September that the JSS would take the place of furlough. However, the terms of the new scheme drew criticism from some and just this week, Sunak has made some amendments to the offering.

The initial Job Support Scheme

The original plan for the JSS was to support the wages of employees who worked at least a third of their usual hours. It was designed knowing many businesses are operating at a reduced capacity and thus don’t need as many workers.

An employer would pay the full wages for the amount of time worked by the employee. For the hours the employee was away from their usual job, the government intended to pay 33% of their wages and asked businesses to match this 33%. Companies could chose to top this up further so employees would receive their whole pay packet each month.

The scheme was criticised for not going far enough to protect jobs. Analysts at the Resolution Foundation, a think tank dedicated to improving living standards for people on lower- and middle-incomes, found it would still be more cost effective for businesses to cut jobs. The team found keeping one employee on full-time hours would be cheaper than having two on part-time hours supported by the JSS.

The amended Job Support Scheme

Reacting to these criticisms and the developing health and employment crises heading into winter, the chancellor this week announced significant changes.

Under the new terms, an employee now only has to work one day a week to qualify for support. Additionally, the employer contributions for the time employees are out of their usual role have been slashed from 33% to just 5%. The government, as a result, will pay 62% of a worker’s wages.

In an updated analysis of the offering, the Resolution Foundation finds this has significantly reduced the cost of keeping staff on this new type of furlough, falling from £233 a month to £35. The think tank says the scheme is now “fit for purpose” and will “hugely increase the incentive for firms” to take up the help.

How will this affect designers?

While changes to the JSS plan was made mainly with the hospitality and tourism sectors of the UK economy in mind, design businesses similarly operating at reduced capacity could stand to gain from the changes.

Jack Tindale, design and innovation policy manager at thinktank Policy Connect, says the amendments to the JSS are a welcome improvement.

“The Chancellor has thankfully addressed one of the key flaws in the programme,” he says. “This will have a major impact towards encouraging firms to make use of the scheme, which had previously been no better off in cutting hours rather than jobs.”

The fact these changes have come at the eleventh hour, however, is still a draw for criticism. The last-minute expansion of the JSS, just nine days before the end of the furlough scheme, means many jobs that were left in the lurch could have already been terminated.

Additionally, the fact remains furloughed workers will be losing out on money – the CRJS paid 80% of their usual wage, the new JSS will only cover two-thirds. While some employers will top that up, many won’t be in a position to. According to a recent Design Week poll, some 56% of designers are still on furlough, with no idea when they will be brought back.

What about self-employed and freelance designers?

Parity between employees and self-employed workers has been a contentious issue throughout the pandemic.

While the Self-Employed Income Support Scheme initially offered a similar 80% of a worker’s average wage paid by the government, a Treasury Select committee report back in June suggested self-employed workers made up a huge number of the conservatively-estimated one million people “falling through the gaps” of government support.

Alongside new measures for the JSS, the chancellor also announced this week that more money would be put aside for self-employed workers, supposedly to the tune of £3.1 billion.

Previously, self-employed workers could apply for grants to cover up to 20% of their lost income. That has now been boosted to 40%. The maximum grant will rise from £1,875 to £3,750.

“[This will] be of some assistance to the design sector – however, grants to cover losses will still only be at 40% of an individual’s average monthly profits, and even with reforms to benefits, this is unlikely to be of much relief to those already struggling,” says Tindale.

He continues: “There was also no additional support provided to the upwards of three million individuals who are still excluded from the existing furlough and self-employed support schemes, such as those who have been self-employed for less than a year.”

The wider creative sector

Back in July, the government announced a £1.57 billion cultural recovery package to see the nation’s arts and culture sector through the pandemic. But rapidly evolving circumstances suggest this may not be enough.

“The continued lockdown measures for increasingly large areas of the country are still affecting the wider economy and it’s no secret that the arts and creative industries have been particularly affected by the downturn,” says Tindale. A DCMS report from back in July named the pandemic as biggest threat to the creative industries in a generation.

“Despite the cultural support provided by the Government, many creatives are still bereft of much of the assistance they require to remain viable – and without a return to normal conditions, it is inevitable that many jobs in this sector will be lost, perhaps for good.”