Did you listen to Chancellor Rishi Sunak’s Economic Statement last Wednesday 8 July?
“We will not be defined by this crisis, but by our response to it,” he said, and respond he did.
It was the second stage of his response to the coronavirus pandemic, and the focus is protecting, supporting and creating jobs.
The first stage involved providing crucial and immediate support in March through initiatives such as the Coronavirus Jobs Retention Scheme, where employees are furloughed on 80% of their salaries. £20.8 billion has been claimed by businesses so far, which has ensured that 9.1 million people kept their jobs.
However it was never expected to run indefinitely, and Mr Sunak confirmed the scheme will wind down by October and be replaced by a Jobs Retention Bonus Policy aimed at retaining people in work and staving off the threat of unemployment for millions.
Here’s a breakdown of the policy, and a summary of the Summer Economic Statement:
Protecting Existing Jobs
Jobs Retention Bonus Policy:
The policy has at its core a reward system for employers who bring back furloughed staff and retain them till January 2021. Companies will be paid a Jobs Retention Bonus of £1,000 for each employee, on the condition that they are paid a minimum of £520 per month.
Financial commitment: £9 billion.
Hospitality & Leisure:
There was an acknowledgement that these sectors employ more than 2 million people who tend to be among the lowest paid n the country. Consequently, people who work in this sector have been some of the hardest hit by the pandemic. And the numbers don’t lie; 1.4m have been furloughed!
The Chancellor announced two new measures to revive the hospitality and leisure industries. The first is a VAT reduction on food, accommodation and attractions such as amusement parks from 20% to 5%. The reduction on this sales tax takes effect on Wednesday 15 July and will run until 12 January 2021.
It’s expected to benefit 150,000 businesses and protect 2.4 million jobs.
Financial commitment: £4 billion.
The second measure to facilitate recovery in the hospitality and leisure sectors has been designed specifically to get customers back into restaurants and pubs. The government-backed “Eat Out to Help Out” discount will be available for everyone in the country to use on certain weekdays this August.
Patrons will benefit from a 50% discount (up to a maximum of £10 per head) from Monday – Wednesday for the month, and businesses can register from Monday 13 July.
Supporting People To Find Jobs
A new kickstart scheme targeted at young people will pay employers to create new jobs for 16-24 year-olds at risk of long-term unemployment.
To qualify, the jobs must last six months, be for at least 25 hours per week and pay at least minimum wage. With a £6,500 grant per person and no cap on available places, the expectation is that this guarantees that the youth do not bear the brunt of the economic effects of the pandemic.
Financial commitment: £2 billion.
Apprenticeships, Trainees & Support for the Unemployed:
Mr Sunak also announced schemes to encourage employers to take on trainees, Career Advisers to support 250,000 people, an expansion of the universal skills offer (with plans to triple existing places), apprenticeships funded at £2,000 each, and support for the unemployed with more work coaches, and £1 billion pumped into the Department for Work and Pensions to help support people back into work.
A Green Recovery:
Government ministers have previously talked about making this a green recovery, and the Chancellor announced a historic investment in infrastructure & jobs in the sector by way of a green homes grant, which will provide homeowners and landlords with vouchers to make their homes more energy-efficient from September.
Expected to make 650,000 homes more energy-efficient, the vouchers will cover two-thirds of the cost or £5,000 per household. This will double for low income households.
Financial commitment: £2 billion.
Stamp Duty Cut:
Probably the most eye-catching announcement was the immediate cut in stamp duty on property sale transactions below £500,000 until 31 March 2021. This is expected to resuscitate the property industry and In the Chancellor’s estimation, this temporary cut will benefit 9 out of 10 people buying their main home.
Total financial commitment for these announcements and initiatives is £30 billion. The third phase of his coronavirus response will be announced as part of the Autumn Budget & Spending Review.