31 July 2020
Ministers have announced an extension to the Government Co-Funded Payroll Scheme (CFPS) until March 2021. The scheme, which was introduced in April, was due to end on August 31, but will now be phased out from September 2020 until March 2021. From September the subsidies received by businesses for each employee will be gradually reduced.
The Minister for Economic Development, Tourism, Sport and Culture, Senator Lyndon Farnham, said: “This is a significant extension of the payroll scheme, which is a more substantial scheme than most jurisdictions worldwide, and gives greater flexibility and support to employers, employees and the self-employed.
“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.”
The Minister for Treasury and Resources, Deputy Susie Pinel, said: “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 employes are Entitled or Entitled to Work, or they can hire people who are Registered if they were 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.”
From August 2020, in order to be eligible to claim under the scheme, businesses will be required to return to broadly normal trading patterns (in line with health advice) and will not be able to remain closed if safe to open, or artificially restrict revenue to make them eligible for CFPS.
This scheme will have cost an estimated £93 million by the end of August. This is significantly below the initial £138 million estimate. The gradual tapering of the scheme until March next year will cost approximately another £26-£53 million, bringing the estimated total cost of the CFPS to between £108 million and £137 million.
In considering the future of the scheme, Ministers have had to balance the need to make prudent use of public money with the importance of giving certainty to business, and of avoiding a sudden end to financial support. The certainty provided by a guaranteed employee subsidy until March 2021 will allow businesses to plan for future trading conditions.
Ministers will continue to monitor the CFPS and will be open to amending the scheme if a change in the prevalence of the virus in Jersey impacts on public health restrictions and associated trading.
The subsidy will operate in the following way from September 2020 to March 2021: