Summer Statement serves up jobs-first package
Courtesy of the Institute of Chartered Accountants in England and Wales (ICAEW)
9 July 2020: the Chancellor’s Summer Statement put forward a plan for jobs, green investment and a variety of targeted tax cuts, but also signalled a clear intention to wean businesses off government support.
Billed as the second part of a three-phase plan to secure the UK’s economic recovery from coronavirus, Chancellor Rishi Sunak’s statement focussed firmly on the protection and creation of jobs, aiming to avoid a spike in unemployment over the coming months.
Chief among the announcements was the Jobs Retention Bonus – a surprise measure designed to persuade employers to retain staff. The plan hands companies a £1,000 bonus for each furloughed employee who is still employed as of 31 January 2021.
The furlough scheme itself, the Chancellor said, will wind down “flexibly and gradually” by 31 October as planned. Sunak stated that calling for “endless extensions” to the scheme was irresponsible as it would give people “false hope” that they could return to the jobs they had before lockdown. Treasury data up to 5 July stated that the Job Retention Scheme had so far cost the government £27.4bn.
In a bid to head off potential mass youth unemployment, the Chancellor announced a £2bn Kickstart Scheme, which will pay employers to create new jobs for 16-24-year-olds at risk of long-term unemployment. Funding will cover 100% of the National Minimum Wage for six months, provided the jobs are new and offer 25 hours per week of work, with no cap on the scheme.
For the next six months, apprenticeships will also be supported by bonuses for companies. Firms will get a payment of £2,000 for each new apprentice they take on under the age of 25 – companies taking on apprentices aged over 25 will get £1,500.
Targeted tax cuts
With hospitality and tourism among the hardest-hit industries, the Chancellor has cut VAT on food, accommodation and attractions from 20% to 5% from today until 12 January 2021.
In a further bid to boost ailing restaurants and cafés, the Chancellor also announced that from Monday to Wednesday throughout August, meals at participating businesses will be 50% off, up to a maximum discount of £10 per head for everyone via ‘eat out to help out’ vouchers. Businesses will be able to register for the scheme through a website launching on Monday, with the Chancellor claiming that firms will have their money back within five working days.
The Chancellor also confirmed the much-trailed stamp duty holiday, with no SDLT to be paid on properties below £500,000 until 31 March next year. The changes take effect immediately.