On Wednesday 8 July 2020, Chancellor Rishi Sunak announced further spending and initiatives in order to revive the UK’s economy in the wake of the Coronavirus pandemic. It is perhaps unusual to announce new measures during a Statement, which historically focuses more on providing an update on the country’s spending status and achievements as set out by the Budget. However, the announcement of new plans did not come as a surprise and it was expected that further new policies would be introduced in order to support struggling industries that have been hit particularly hard.
Watch the video to see Simon’s reaction to the Chancellor’s new plans and continue to read below for a summary of the key proposals that are to be launched imminently:
- Job Retention Bonus to see out the end of the Furlough Scheme
At the end of May this year it had already been announced that, although the Coronavirus Job Retention Scheme would be extended until October 2020, it nonetheless must come to an end. As the Chancellor said during his Summer Statement speech “Leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before” which is both unrealistic and unsustainable. However, to provide light at the end of the tunnel, Sunak has launched a Job Retention Bonus scheme which grants every eligible business a one-off payment of £1,000 for every employee who returns to work from furlough and is retained until 31 January 2021. To qualify for this bonus, employees must earn at least an average of £520 per month from 31 October 2020 until 31 January 2021. It is estimated that the Treasury is prepared to spend over £9 billion should every furloughed employee be able to return to work.
- A new Kickstart Scheme to support the generation hardest hit
Reports have repeatedly claimed that those aged between 16 and 24 have been most severely impacted by Coronavirus. Sunak has responded by pledging £2 billion to a new programme which specifically targets those most in need. Young people aged between 16 to 24 who are currently on Universal Credit will be able to receive 6-month work placements fully funded by the government. Employers who are able to offer such placements for a minimum of 25 hours per week at minimum wage will receive a £1,000 admin fee per young employee – where their salary will be paid for in full by the government. Employers are able to top up the wage beyond minimum wage if they wish and the scheme will apply through England, Scotland and Wales, whilst Northern Ireland will receive separate funding. The scheme will be open to funding application from August 2020 and will initially run until December 2021.
In addition to this, apprenticeships will also see a boost in funding and support from the government. Firms who are able to offer apprenticeships will receive a payment of £2,000 per new apprentice they take on, and £1,500 for apprentices over the age of 25.
- Green investment promised as to not forget about environmental goals
The government had previously announced £3 billion worth of investment for decarbonising housing and public buildings. Whilst this is not new, it reaffirms the government’s intention and strategy towards achieving environmental targets of getting to net-zero emissions by 2050. Vouchers worth £5,000 and up to £10,000 for the poorest family will be offered for the purpose of refitting homes with insulation to help cut carbon emissions from a £2 billion budget. The remaining £1 billion from the overall budget has been allocated to making public buildings greener.
- Stamp duty threshold to temporarily rise in a bid to stimulate the housing market
Amongst the top sectors adversely affected by Coronavirus has no doubt been the property market. Multiple reasons – from people shielding to the lockdown itself, to those being put on furlough and even others losing their jobs – have all exacerbated the industry. In response, Sunak has temporarily raised the current stamp duty threshold from £125,000 to £500,000. This means that first-time buyers will not have to pay any stamp duty on properties that do not exceed £500,000. Second home buyers or buy-to-let landlords will still have to pay the Higher Rate for Additional Dwellings which is charged at 3% of the property value. However, such buyers and landlords will still benefit from the higher threshold. The stamp duty holiday, as it’s being referred to, comes into force immediately and is intended to be in place until 31 March 2021.
- Hospitality and Tourism sector to receive help through VAT cuts
The UK has one of the highest VAT rates on the hospitality and tourism sector in Europe, as most other countries have taken advantage of EU rules which allow reduced VAT rates for these services. However, from 15 July 2020 to 12 January 2021, Sunak has announced that VAT will be cut from 20% down to 5% on all food and non-alcoholic drinks in restaurants, pubs, and cafes, as well as hot takeaway food. Other businesses that are also eligible to receive a VAT cut include hotels, B&B’s and admission to amusement and entertainment venues such as theme parks and cinemas.
- “Eat out to help out” discount to encourage people to return to restaurants
Whilst there were predictions that the Chancellor would be issuing £500 vouchers for people to use on retail and hospitality businesses, Sunak has instead introduced an “eat out to help out” scheme. For the month of August only, those who eat out in participating restaurants, cafes, pubs or other dining establishments (but not takeaways) on Monday through to Wednesday will be able to receive a 50% discount on food and non-alcoholic drinks up to a maximum of £10 per person. There will be no limit as to how many times you can use this discount.
Businesses which wish to take part in this scheme will be able to apply online from next week and will receive a refund for the discount offered to customers direct into the business’ bank account within 5 working days. This scheme is estimated to support around 130,000 businesses and protect 1.8 million jobs.
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