Chancellor of the Exchequer Rishi Sunak has delivered his summer statement at a crucial moment for the UK economy, as many sectors in the nation's service economy begin to reopen and as the UK’s 'furlough' Coronavirus Job Retention Scheme begins to move into its next, part-time stage from August until its closure in October.
The statement saw the Chancellor attempt to balance plans to stimulate the economy while supporting businesses facing partial or complete closure - as well as people facing reduced salaries and redundancies - all against a backdrop of the greatest crisis facing the economy for a generation.
The Treasury promised the statement would focus on 'securing the recovery', and the Chancellor began his statement by confirming the statement would be a 'plan for jobs’ that would 'protect, support and create jobs… in every part of our country', and ensure that 'no one will be left without hope.'
While most of the plans were announced in advance, the Chancellor produced a 'rabbit out of the hat' with the previously unheralded announcement of a Job Retention Bonus that would come into force once the furlough scheme ends in October. Employers who re-employ formerly furloughed staff continuously from October until the end of January 2021 - and pay them a minimum of £520 per month in this time - will receive a £1,000 bonus per employee, with payments starting from February 2021.
As expected, further measures to decrease and address anticipated job losses were front and centre of the statement. One of the most striking details announced in advance of the statement was the creation of a 'kick-start' temporary job creation scheme for the under-25s to address the anticipated rise in youth unemployment. The value of the scheme is estimated at £2 billion, and it will support six-month placements for 18 to 24 year-olds who are claiming universal credit and at risk of long-term unemployment, with no cap on the number of jobs created. For each job, the Government will cover 100% of the national minimum wage for 25 hours a week, and employers will have the option of providing wage top-ups. Firms will be able to access the subsidies within a month, with the first young people accessing the scheme in the autumn.
In addition, plans to help over a quarter of a million people in England receive personalised advice on training and work were confirmed with an extra £32 million announced for the National Careers Service over a two-year period. A total of £111 million will also be allocated for new traineeships for young people in England in 2020-21, with firms receiving £1,000 for each work experience placement they provide. Furthermore, businesses will receive £2,000 per apprentice they hire under the age of 25 - and £1,500 per apprentices hired aged 25 and over - between 1 August 2020 and 31 January 2021, while a total of £17 million will also be made available for work academies in England.
The Chancellor also outlined plans to encourage people to spend, and confirmed plans to support the housing market in England and Northern Ireland by increasing the Nil Rate Band of Residential Stamp Duty Land Tax from £125,000 to £500,000 immediately. The move will last until the end of March 2021 and is expected to see 90% of all purchasers paying no stamp duty rates at all.
The need to get people spending was further addressed with the announcement of two measures to support the hospitality industry. VAT on food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK, as well as for accommodation and attractions, will be cut from its current rate cut of 20% to 5% from 15 July 2020 to 12 January 2021. In addition, the Chancellor announced the unprecedented move of establishing an 'eat out to help out' discount scheme, whereby people eating in participating restaurants will be able to receive half-price food from Mondays to Wednesdays up to a maximum of £10 off per person throughout August.
Elsewhere, one of the few positive stories in the COVID-19 crisis has been green shoots of recovery in nature and the environment, leading many to push for additional measures to be made to protect and enhance these positives as lockdown measures are eased. The Chancellor responded by confirming plans released before the statement for a £3 billion 'green jobs plan'. Of this, approximately £1 billion will be allocated to decarbonising public buildings - including schools, hospitals, houses, prisons and military bases - and to invest in green heating technology. The majority of the remaining £2 billion will go towards 'Green Homes Grants', which will help homeowners and landlords carry out residential improvements such as heat pumps, low-energy lighting, insulation, energy efficient doors and double glazing. Under the scheme, the Government will contribute up to two-thirds of the cost of energy efficient measures up to a maximum of £5,000 per household, or the full cost up to £10,000 for the poorest households.
The measures announced are overwhelmingly designed to support the UK economy, but further details of how this will be paid for are expected in the autumn when the even more significant fiscal events of the spending round and budget are announced. GRANTfinder will report on these events as they occur.
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