Lunchtime of Wednesday 08 July 2020 saw the delivery of the Chancellor Rishi Sunak’s Summer Statement
during which a new package of measures of up to £30bn was announced to help individuals and businesses through the continuing challenges presented by the coronavirus. If you were hungry and listened in, you will have to wait to August to get a discount on your meal out…more on this later.
The jobs retention scheme (the furlough scheme as some know it) has been central to the government's economic response, and furlough has been a vital lifeline to many businesses and individuals. The Chancellor confirmed that the scheme cannot – and should not – continue indefinitely, as it would be in nobody's best interests to allow jobs to continue to exist purely because of government subsidies. The furlough scheme will end in October 2020, as previously announced.
Above this, the Chancellor has announced a new policy to reward employers who bring people back from furlough – a jobs retention bonus of £1,000 payable to the company on meeting certain conditions (paid in January 2021).
This headline announcement is part of the Chancellor's three-point plan to support, create and protect jobs in the UK.
Supporting jobs focused on the younger generations
Over 700,000 individuals will leave education in 2020. Big numbers I am sure you would agree, with those aged under 25 being 2.5 times more likely to work in a sector that has been subject to closure owing to the pandemic. To help, there's a new Kickstart Scheme, a new programme to support young people into work. The scheme will pay employers directly to create new jobs for 16-24-year olds at risk of long-term unemployment. The funding will be conditional on a firm proving that the jobs created are new, and conditions will apply regarding minimum hours and pay. Provided the relevant conditions are met, the government will pay a young person's wage for six months. Employers will be able to apply for this funding from next month, and there is no cap on the number of places available. The plans also go further, providing funding for employers to take on new trainees and apprentices.
Creating jobs / Stamp duty cut
The Chancellor emphasised the importance of the housing sector for job creation, with three quarters of a million jobs in housebuilding alone. With property transactions having fallen by 50% in May 2020, and house prices falling, there is significant uncertainty in the property market, and the Chancellor is keen to encourage individuals to buy and sell. To this end, he has announced a cut to stamp duty with immediate effect. Under normal rules, there is no stamp duty on transactions below £125,000. As of 08 July, this will increase to a threshold of £500,000. This is a temporary change until 31 March 2021 and will mean that the average stamp duty bill will fall by £4,500, with nearly 9 out of 10 people buying a main home this year being taken out of the stamp duty bracket altogether.
More money is going to go into infrastructure, with an emphasis on the creation of 'green' jobs. He aims to create local jobs through a new £2bn green homes grant for homeowners and landlords (up to £5,000) to make their homes more energy efficient.
Protecting jobs / VAT cut
The focus here was on protecting jobs in the hardest hit sectors of hospitality and tourism. The UK economy relies on social consumption in pubs, restaurants, hotels and attractions and over 2 million people are employed in these sectors. 1.4 million people are currently furloughed.
So, there is a cut to VAT on food, accommodation and attractions from 20% to 5% from Wednesday 15 July 2020 to Tuesday 12 January 2021. He noted that this should provide a catalyst of some £4bn to protect jobs in the hospitality and tourism sectors.
Even the Chancellor admitted that his final plan was new, innovative and untried before in the UK. This is encouraging consumers to 'eat out to help out', in a measure to protect the 1.8 million people who work in restaurants and pubs. For the month of August 2020, everyone in the country will be given an 'eat out to help out' discount, meaning that meals eaten at any participating business from Monday to Wednesday would be discounted by 50%, up to a maximum discount of £10 per head including children. Businesses will need to register to take part in the scheme through a website which will open on Monday 13 July 2020.
Real deal, or just a meal deal? You decide!