The Chancellor of the Exchequer, Rishi Sunak, made a statement to the House of Commons yesterday, where he outlined his plans to support the economy in the coming months as the country begins to recover after the impact of the coronavirus crisis.
Before his Summer Economic Update, there were predictions that the Chancellor would announce an amendment to the furlough scheme, cuts to VAT rates, and increased spending on infrastructure.
The update has provided more detail on the speculations, with the Chancellor setting out a plan to “protect, support and create jobs” as we enter the second phase of recovery. Here, we share the key takeaways from the Summer Economic Update.
Job retention measures
Under the Job Retention Bonus scheme, employers will receive a one-off £1,000 bonus for each furloughed employee who is still employed as of 31 January 2021, to help companies retain furloughed employees during these difficult times.
Kickstarting new jobs
The launch of a new £2 billion Kickstart Scheme will pay employers to create hundreds of thousands of new jobs for 16-24 year olds who are claiming Universal Credit and are at risk of long-term unemployment. The funding available for each six-month job placement will cover 100% of the National Minimum Wage for 25 hours a week.
Also aimed at youth unemployment, the Chancellor announced that the Government will provide a payment to employers for each new apprentice they hire between August 2020 and January 2021. For apprentices hired aged under 25, the employer will receive £2,000, or £1,500 for apprentices aged 25 and over.
To ensure more young people have access to high quality training, £111 million will be invested to triple the scale of traineeships in 2020-21. The Chancellor also announced £17 million of funding to triple the number of sector-based work academy placements in 2020-21.
To help benefit claimants find a job, £900 million will be allocated to double the number of work coaches in Jobcentre Plus to 27,000 by March 2021, and £32 million has been designated to expand the National Careers Service, to provide bespoke advice on training and work for 250,000 people.
Support for housing and infrastructure
In a highly speculated move to help boost the property market after property transactions fell by 50% in May, Mr Sunak announced a “Stamp Duty holiday”. Buyers in England and Northern Ireland will pay no Stamp Duty on the first £500,000 when they move home until 31 March 2021. Prior to the announcement, homebuyers had to pay stamp duty on properties over £125,000, except first-time buyers, who paid no stamp duty on properties less than £300,000.
In a bid to cut energy bills while supporting existing – and creating new – jobs for tradespeople, a new £3 billion Green Homes Grant scheme has been set up, where homeowners and landlords in England will be able to apply for vouchers to pay for green improvements such as loft, wall and floor insulation.
A £1 billion programme to make public buildings greener has also been announced to help the UK meet our Net Zero goal by 2050.
The Chancellor also revealed that £100 million is being spent across 29 projects across the UK to upgrade and maintain local roads.
Hospitality and tourism boost
According to the Office for National Statistics, 8 in 10 workers have been furloughed in the accommodation and food service activities sector. So, the Government has introduced new measures to help one of the worst affected industries. One eagerly anticipated announcement was the reduction of the VAT rate applied on tourism and hospitality-related activities, which the Chancellor today confirmed will be cut from 20% to 5% for six months until January 2021.
Lastly, a new “Eat Out to Help Out” discount scheme will be launched next month to help boost cafes, pubs and restaurants. Aimed to “get customers back into restaurants, cafes and pubs, and protect the 1.8 million people who work in them”, customers – including children – can enjoy up to £10 off meals and non-alcoholic drinks each Monday to Wednesday throughout August 2020. Businesses will need to register with the scheme before being able to offer the discount; details on how to do this are due to be released at a later date.
Summer Economic Update in brief
Mr Sunak has focused the Summer Economic Update on creating and protecting jobs. The series of measures announced is worth up to £30 billion, helping to ease the financial burden as the furlough scheme and other financial measures, such as SEISS, will start to taper off over the next few months.
We will keep you informed of all updates during this time so you can be aware of all the support being made available to you and your business. If you have any questions or enquiries, please get in touch with the team here or call us on 01702 466 886.