The Chancellor’s Summer Statement on Wednesday 8 July amounted to a £30bn mini-budget aimed at preventing mass unemployment by boosting sectors most affected by the lockdown such as hospitality, tourism and property.
Chancellor of the Exchequer Rishi Sunak launched his Summer Statement on Wednesday with some sobering statistics about the state of the economy. He said that in two months, the UK economy shrunk by 25% – the same amount it grew in the previous 18 years. He also reported analysis by the World Bank that suggests this will be the deepest global recession since the Second World War with the broadest collapse in incomes since 1870.
On the back of those bleak pronouncements, the Chancellor announced a “plan for jobs” involving a combination of public spending and tax cuts. His goal is “to protect, support and create jobs”, particularly among the young, who could suffer disproportionately in the job market.
This three-tier approach to employment involves:
- Supporting jobs with direct help for young people to find work or gain the skills needed to get a job.
- Protecting jobs in hard-hit industries such as hospitality and tourism by encouraging demand for businesses in these sectors.
- Creating jobs through action to get the property market moving again, and investment into infrastructure and new technologies.
Let’s look at each in turn.
1. SUPPORTING JOBS
The Kickstart Scheme
The Chancellor announced a £2bn Kickstart Scheme to help create jobs for young people and prevent an entire generation from being “left behind”.
The fund will pay employers to create work placements for people on Universal Credit aged between 16 and 24 who are at risk of long-term unemployment. The government will pay their wages (of at least National Minimum Wage for not less than 25 hours per week) plus an amount to cover overheads for the first six months. For a 24-year-old, the grant will be around £6,500.
Payments to employers who hire new apprentices
The government will pay businesses to hire young apprentices, with a payment of £2,000 per apprentice. Plus, there will be a bonus for businesses to hire apprentices aged 25 and over with a payment of £1,500.
Funding for sector-based Work Academies
The government is expanding its universal skills offer with sector-based Work Academies providing training, work placements and a guaranteed job interview in high-demand sectors. An additional £32m will be set aside for a National Careers Service to provide advice on work, and for training recruitment and career advisers for over a quarter of a million more people.
Traineeships for young people
The government will pay employers £1,000 to take on trainees, with enough funding to triple the current participation, and will also increase funding to increase the take-up of higher education.
2. PROTECTING JOBS
The Chancellor outlined his plan to protect jobs that already exist by helping some of the UK’s highest-employing but hardest-hit sectors: hospitality and tourism. He said that 80% of hospitality firms temporarily stopped trading in April and 1.4 million workers have been furloughed, the highest proportions of any sector.
As a result, his plans are:
VAT will be reduced to 5% from 15 July until 12 January 2021 for:
- eat-in or hot takeaway food and drinks from restaurants, cafes and pubs, excluding alcohol
- holiday accommodation in hotels, B&Bs, campsites and caravan sites
- attractions such as cinemas, theme parks and zoos.
The Chancellor described this as a “£4bn catalyst” that will benefit over 150,000 businesses and consumers, helping to protect over 2.4 million jobs.
Eat out to Help Out
To support over 129,000 businesses in the hospitality industry, for the month of August everyone in the country will be given an “Eat Out to Help Out discount”. Diners will get 50% off meals and non-alcoholic drinks, up to £10 per person, including children. This will be valid from Monday to Wednesday at participating restaurants, bars and cafes (eating in only). Businesses will need to register and can do so through a simple website, which will be open next Monday.
Job Retention Scheme
The government will reward employers who successfully bring staff back from furlough. For each employee bought back from furlough and continuously employed through to January, the organisation will receive a Job Retention Bonus of £1,000 per person.
3. CREATING JOBS
Housing is one of the UK’s most important sectors for job creation, but property transactions fell by 50% in May, and prices have fallen for the first time in eight years.
To stimulate the housing market, there will be no stamp duty on property transactions below £500,000, with immediate effect until 31 March 2021. As a result, the average stamp duty bill will fall by £4,500.
Green Homes Grant
Homeowners in England will get up to £5,000 to make their homes more energy-efficient. From September, homeowners and landlords can apply for vouchers to fund energy-saving home improvements. The £2bn ‘Green Homes Grants’ is intended to help unlock work for thousands of tradespeople.
The Chancellor’s Summer Statement made all the right noises by recognising the importance of consumers and the property sector to our current economy. Much of the small print has still to be announced, and we will update you with more information as and when it becomes available.
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