Chancellor Rishi Sunak has delivered his summer economic plan which is hoped to help the UK economy recover from the impact of the coronavirus pandemic. But is it enough? Senior associate solicitor, Nicola Beneduce, summarises the key points.
The chancellor’s summer statement includes plans to protect jobs, help younger workers and encourage spending with measures such as a VAT cut for leisure activities and a restaurant voucher scheme.
Here is a summary of the main points:
- In a bid to stop mass unemployment, a job retention bonus has been introduced to encourage firms to retain furloughed staff with a one-off £1000 payment to employers for every furloughed employee retained until the end of January 2021. This initiative applies to any workers earning over £520 per month across the UK with the cost estimated at up to £9.4bn.
- An Eat Out Scheme has been introduced for the entire month of August 2020. The scheme will entitle every diner to a 50% discount of up to £10 per head on their meal, at any participating restaurant, café, pub or other eligible food service establishment. The discount can be used unlimited times and will be valid Monday to Wednesday on any eat-in meal (including on non-alcoholic drinks) at participating establishments which will need to register online and will be fully reimbursed for the 50% discount. Details of the new website are yet to be announced.
- There will be a six-month VAT cut for restaurants, hotels and attractions from 20% to 5% which is effective from 13 July, 2020 until 12 January, 2021. Food and non-alcoholic drinks in restaurants, pubs and cafes, as well as hot takeaway food will be covered. Accommodation in hotels and B&Bs and admission to attractions such as theme parks and cinemas are also affected.
- In a bid to boast the housing market, a stamp duty holiday has been made effective from today (8 July) until 31 March, 2021, increasing the threshold for stamp duty on residential property in England and Northern Ireland from £125,000 to £500,000. This initiative is expected to cost around £3.8bn
- A Green Home Grant will be introduced for qualifying households for projects to make homes more energy efficient in England providing at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household. For low income households, the scheme will fully fund energy efficiency measures of up to £10,000 per household.
- There is an emphasis on support for young workers with a ‘Kickstart scheme’ providing a £2bn fund to pay for six-month high quality work placements for 16 to 24-year-olds currently on universal credit and are deemed to be at risk of long-term unemployment. Funding available for each job will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions.
- A job-finding support service will be effected for those out of work for less than three months, costing £40m and £32m will be spent over two years for a National Careers Service to provide advice on work and training;
- There will be £1bn of grants to public sector bodies to improve energy efficiency with £50m towards a social housing decarbonisation fund, aimed to improve the energy efficiency of socially rented homes.
- The chancellor also gave further details of a £5.6bn package of infrastructure measures, previously announced by the prime minister on 30 June, 2020. This includes measures for hospitals, school buildings, transport, and housing.
Whilst these measures are a step in the right direction to support businesses and individuals over the difficult months ahead, there are certainly some holes with some sectors appearing to have been forgotten. In particular, there is no clear support outlined yet for the hard hit retail sector as well as charities that have been unable to fundraise during the months of lockdown.
It will be crucial to see how the private sector can stand on its own feet, create jobs and drive growth particularly when these initiatives come to an end in early 2021.
For further advice on the Coronavirus Job Retention Scheme or to discuss any initiatives outlined in the chancellor’s summer statement, please contact Harrison Drury’s employment and regulatory team on 01772 258321.
This information is correct as of 8 July, 2020. This blog post is for general guidance only.