Rishi Sunak’s Summer Statement

Thursday July 9, 2020

With an astonishing £160 billion already pumped into efforts to soften the economic and personal blows of COVID-19, Chancellor Rishi Sunak’s summer statement was always going to have people paying attention. We already know that some of the existing measures are being wound down, so all eyes were on the Chancellor to see what his next move would be. Here are the main headlines from the statement:

Coronavirus Job Retention Scheme winding down, but...

First, let’s look at the furlough scheme updates. We’ve already heard about the system pulling back and leaving employers to shoulder more of workers’ wages from August, gradually shifting the burden onto them month by month until the scheme ends in October. However, some interesting news came in the form of a “jobs retention bonus” announcement. Obviously, once the furlough scheme dies off, there’s a looming threat that it’ll take a lot of jobs with it. To try and head that threat off, at least temporarily, the government will be paying out a £1,000 bonus to employers for every furloughed worker they hold onto between November and January. The bonus will only kick in if the employees earn at least £520 per month, though.

Jobcentre coaches and apprenticeships boosted

The number of work coaches available at the UK’s Jobcentres will be doubled, according to Chancellor Sunak. In addition, businesses are going to be rewarded more for taking on apprentices. This encouragement will be backed up with cold, hard cash, too, with firms able to grab £2,000 per young apprentice they bring in. For apprentices over 25, that bonus drops to £1,500, though. Also, this system won’t be sticking around forever, since it only applies to employers taking it up between August and January.

The “kickstart” job creation scheme

In another pretty interesting move from Rishi Sunak, the Chancellor announced that the government is committing to paying younger new employee’s wages for 6 months. This is a £2 billion investment from the government, aimed at employees between the ages of 16 and 24. There are a few wrinkles to keep in mind here, of course. The scheme’s designed for people on Universal Credit who are looking at potentially long-term unemployment. The government will pay for 25 hours a week at the national minimum wage rate for 6 months, with employers having the option of topping this up themselves.

VAT slashed for hospitality businesses

For obvious reasons, COVID-19’s taken a big bite out of UK tourism and hospitality. To try to ease the pressure a bit, VAT rates on accommodation, food and “attractions” are coming down to just 5% for 6 months, from July to January. This cut is pretty tightly focused on a specific sector, but it could be a decent short-term boost if you’re in the right kind of business.

“Eat out to help out”

This is a slightly more unusual one, and it’s raising a few eyebrows already. The “eat out to help out” scheme is all about encouraging people to start using restaurants again – something we’ve been either warned against or actively prevented from doing until recently. Understandably, many people have been put off the idea of eating food prepared by others for a while now, so the government will be issuing vouchers for up to 50% off per head when they eat out at participating cafes, pubs and restaurants.

There are a few strings attached, as always. The discounts will only apply from Mondays to Wednesdays throughout August, for a start. There’s also a hard cap of £10 per head on the discount you get. There’ll be a website for businesses to register for the scheme, with the cash coming inside 5 working days.

Stamp duty cut and “green investment” boosted

With the UK housing market practically grinding to a halt, the Chancellor announced that he’ll be temporarily slashing stamp duty. Effective immediately, the stamp duty threshold will be rising from £125,000 to £500,000, before going back down after the 31st of March next year.

On top of that, in an attempt to revitalise the UK’s “green recovery”, families looking to refit their homes with energy-saving insulation will be able to get vouchers worth £5,000 to help with the costs, with the poorest getting up to £10,000. This comes among other decarbonising measures, including £1 billion being pumped into making public buildings more energy efficient.

To make a long story short...

It’s a typical mixed-bag of announcements, with a lot of them being strictly short-term. However, with COVID-19 still breathing unhealthily down the necks of UK businesses, there’s more than a little good news here. The government’s moving into the next phase of its response to the pandemic, with a lot of delicate balances to strike. We’ll be keeping our ear to the ground as things move forward, so keep checking back for the latest news and updates.

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