Chancellor Rishi Sunak announced extra measures to counteract the impact of COVID-19. This Summer Statement covers a raft of different areas of our lives. We’ve assembled eight key areas that are likely to be relevant to you.
1. Job Retention Bonus Scheme
The current Coronavirus Job Retention Scheme that allows employers to furlough their workers is ending in October. There is real fear that this will be the final nail in the coffin of many businesses.
Chancellor Sunak said: “Furlough has been a lifeline for millions, supporting people and businesses to protect jobs, but it cannot and should not go on forever. Leaving the furlough scheme open gives people false hope that they can return to the jobs they had before.”
The new Job Retention Bonus Scheme is designed to be a bridge from full furlough to employers standing on their own financial feet again. And as a buffer against a sudden increase in unemployment. The new scheme will take over and runs until January 2021. Under this scheme, employers will get £1,000 for every furloughed employee they bring back to work. The employees must be earning an average monthly wage of £520 between October and the end of January next year, in order for the employer to claim their £1,000.
There are currently nine million people on furlough and there is no limit on the number of people an employer can claim for. So there is the potential that this scheme will eventually cost £9bn.
2. Kick Starter Scheme
£2bn has been allocated to this new scheme to help 16-24 year olds on Universal Credit to get a job. Employers can hire someone in this age group for 25 hours a week and the government will pay their minimum wage and employers’ National Insurance Contribution. Employers can top this up to a higher amount, if they wish.
What difference will this make?
Universal Credit payments for the under 25s is £85.68 a week. As part of the Kick Starter Scheme, this becomes weekly earnings of £113.75 for 16 and 17 year olds, £161.35 for 18-20 year olds and £205 for 21-41 year olds.
3. Trainees and apprentices
Employers can also get £1,000 per trainee that they take on from September, between 18 and 24 years old. These can be training courses of between six weeks and six months, including things like CV writing, Maths, English and basic workplace behaviour. Companies will also be eligible for a £2,000 bonus for every new apprentice they bring on board.
4. Stamp Duty Holiday
This is an emergency procedure put in place to help boost the restarting of the housing market. It comes into effect straightaway and means that there is no stamp duty to pay on residential properties under £500,000. Previously, buyers had to pay stamp duty on homes from £125,000.
5. VAT cut
The Chancellor has cut VAT rates from 20% to 5% for those in the leisure and hospitality industries, to help them with their business costs, as they reopen. This includes cinemas, zoos, restaurants, cafes, B&Bs, caravan sites, theme parks and other accommodation and attractions. It is for every business owner to decide if they are able to pass on this cut to the consumer. There may be some good deals, but there will also be a lot of businesses that are just keeping their heads above water and need to factor the VAT cut in to their overall budget. This will cost the Treasury £4.1b in lost revenue.
6. Eat out to help out
In an extra boost to the hospitality industry, the government has launched a ‘half price’ food voucher scheme called ‘Eat out to help out’. It is designed to encourage, possibly reluctant, diners back into restaurants, pubs and cafes. From 15th July and during August, Monday to Wednesday (inclusive), you can get a maximum of £10 off every meal you eat out. This includes children’s meals and non alcoholic drinks, but does not include any accompanying alcoholic drinks. Establishments must register to be part of the scheme.
The Chancellor said of this scheme: “This has never been tried in the UK before. This moment is unique. We need to be creative.”
7. Job Centre Staff increase
Job Centres across England are doubling their staff to 27,000 work coaches. Obviously the Chancellor anticipates an increased need for their expertise in the coming months. There is a predicted figure of youth unemployment rising to 1 million by the end of this year, from 420,000. To help sort this out, the government have also invested £32m in the National Careers Service.
8. Investment in the environment
- Green Jobs Challenge Fund: This aims to create 5,000 green jobs in public authorities and environmental charities and will cost £40m.
- £10m for electric car projects.
- £100m to fund technology that reduces carbon dioxide emissions
- Green Homes Grant Scheme: Vouchers worth between £5,000 and £10,000 for home owners to make green home improvements (like insulation)
This is only a summary of some key points from Mr Sunak’s Summer Statement. And it won’t be the last COVID-19 recovery announcement we hear. The Autumn Budget will, no doubt, have more measures that plan for the future of our economic recovery.