The Chancellor delivered his Summer Economic Update in Parliament today (8th July), which outlined a package of measures to support jobs in every part of the country, give businesses the confidence to retain and hire, and provide people with the tools they need to get better jobs.
Key points to note:
- Job Retention Bonus:To help firms keep on furloughed workers, UK Employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021.
- Kickstart Scheme: A new £2 billion scheme will also be launched to create hundreds of thousands of new, fully subsidised jobs for young people across the country. Those aged 16-24, claiming Universal Credit and at risk of long-term unemployment, will be eligible. Funding available for each six-month job placement will cover 100% of the National Minimum Wage for 25 hours a week – and employers will be able to top this wage up.
- Employment and support schemes:A total of £1.6 billion will be invested in scaling up employment support schemes, training and apprenticeships to help people looking for a job.
- Creating jobs: The plan will also create tens of thousands of jobs through bringing forward work on £8.8 billion of new infrastructure, decarbonisation and maintenance projects. In addition, £5.8 billion will be spent on shovel-ready construction projects to get Britain building.
- Eat Out to Help Out:To encourage people to safely return to eating out at restaurants the Government’s new discount scheme will provide a 50% reduction for sit-down meals in cafes, restaurants and pubs across the UK from Monday to Wednesday every week throughout August 2020.
- VAT: The rate of VAT applied on most tourism and hospitality-related activities will be cut from 20% to 5%.
- Stamp Duty: A temporary increase to the Nil Rate Band of Residential SDLT (Stamp Duty) from £125,000 to £500,000 has been introduced until 31 March 2021.
Delivering his Summer Economic Update in Parliament, the Chancellor announced a package of measures to support jobs in every part of the country, give businesses the confidence to retain and hire, and provide people with the tools they need to get better jobs.
The plan for jobs is the second part of a three-phase plan to secure the UK’s economic recovery from coronavirus. Throughout the pandemic, the UK Government has acted with speed to protect lives and safeguard jobs.
The first stage was a £160 billion support package, which included £49 billion of extra funding for the country’s vital public services including the NHS, paying the wages of nearly 12 million people and supporting over a million businesses through grants, loans and rates cuts.
As the UK enters the second phase in its recovery, the Chancellor’s plan is designed to support jobs by focusing on skills and young people, create jobs with investment in shovel-ready projects and greening our infrastructure, and protect jobs through a VAT cut for the hospitality sector and a landmark Eat Out to Help Out discount scheme for diners.
The Chancellor of the Exchequer Rishi Sunak said:
Throughout this crisis I have never been the prisoner of ideology. For me, this has never just been a question of economics, but of values.
We believe in the nobility of work. We believe in the inspiring power of opportunity. We believe in the British people’s fortitude and endurance.
Our plan has a clear goal: to protect, support and create jobs. It will give businesses the confidence to retain and hire. To create jobs in every part of our country. To give young people a better start. To give people everywhere the opportunity of a fresh start.
The Chancellor said that following this second phase focusing on jobs, there will be a third phase focusing on rebuilding, with a Budget and Spending Review in the autumn.
Supporting jobs
As part of the plan to support jobs, a Job Retention Bonus will be introduced to help firms keep furloughed workers. UK Employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021.
A new £2 billion Kickstart Scheme will also be launched to create hundreds of thousands of new, fully subsidised jobs for young people across the country. Those aged 16-24, claiming Universal Credit and at risk of long-term unemployment, will be eligible. Funding available for each six-month job placement will cover 100% of the National Minimum Wage for 25 hours a week – and employers will be able to top this wage up.
A total of £1.6 billion will be invested in scaling up employment support schemes, training and apprenticeships to help people looking for a job. Young people, who are amongst the worst hit by the crisis, will benefit from this. This includes:
- Businesses will be given £2,000 for each new apprentice they hire under the age of 25. This is in addition to the existing £1,000 payment the Government already provides for new 16-18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan.
- A £111 million investment to triple the scale of traineeships in 2020-21 ensuring more young people have access to high quality training.
- £17 million of funding to triple the number of sector-based work academy placements in 2020-21
- Nearly £900 million to double the number of work coaches to 27,000;
- Over a quarter of a million more young people to benefit from an extra £32 million investment in the National Careers Service.
Creating jobs
The plan will also create tens of thousands of jobs through bringing forward work on £8.8 billion of new infrastructure, decarbonisation and maintenance projects.
This includes a £3 billion green investment package that could help support around 140,000 green jobs and upgrade buildings and reduce emissions.
As part of this package homeowners and landlords in England will be able to apply for vouchers from a £2 billion Green Homes Grant scheme this year to pay for green improvements such as loft, wall and floor insulation that could save some households hundreds of pounds a year on their energy bills while creating thousands of jobs for tradespeople.
And a £1 billion programme will make public buildings, including schools and hospitals, greener, helping the country meet its ambitions of achieving Net Zero by 2050, whilst investing in our future prosperity.
In addition, £5.8 billion will be spent on shovel-ready construction projects to get Britain building. This includes:
- £1.5 billion for hospital maintenance and upgrades
- £100 million for our local roads network
- over £1 billion to start to rebuild schools in the worst condition in England, plus £760 million this year for key maintenance work on schools and FE colleges
- £1 billion for local projects to boost local economic recovery in the places that need it most
- £142 million for court maintenance to repair around 100 courts across England.
Protecting jobs
The plan will also protect jobs. The tourism and hospitality sectors are massive employers in the UK and have been severely impacted by the pandemic due to necessary closures to protect public health. 80% of hospitality firms stopped trading in April and 1.4 million hospitality workers have been furloughed – the highest proportions of any sector.
Ensuring there is enough demand as businesses reopen is key to helping these businesses recover and have the confidence to protect jobs and rehire. Therefore, to encourage people to safely return to eating out at restaurants the Government’s new Eat Out to Help Out discount scheme will provide a 50% reduction for sit-down meals in cafes, restaurants and pubs across the UK from Monday to Wednesday every week throughout August 2020. To find out more, click here
The rate of VAT applied on most tourism and hospitality-related activities will also be cut from 20% to 5%. This will save households around £160 per year on average and, together with the Eat Out to Help Out Scheme, will support over 2.4 million staff at over 150,000 businesses, helping them recover and reopen after the Covid-19 lockdown. This will give these businesses the confidence to maintain their staff, as more people get through the door and business activity kick-starts again.
The chancellor has announced a temporary holiday on stamp duty on the first £500,000 of all property sales in England and Northern Ireland to boost the property market and help buyers struggling because of the coronavirus crisis.
The changes have come in with immediate effect.
“We want people to feel confident to move, to buy, to sell, to renovate, and to improve their homes. So we’re introducing a temporary increase to the Nil Rate Band of Residential SDLT (Stamp Duty) from £125,000 to £500,000 until 31 March 2021. In England and Northern Ireland nearly 9 out of 10 people getting on or moving up the property ladder will pay no Stamp Duty at all. This will drive growth and support jobs across the housebuilding and property sectors”.
Find out more about the changes to Stamp Duty
BCC responds to the Chancellor’s Summer Statement
Commenting on the Chancellor’s Summer Statement, delivered today, BCC Director General Dr Adam Marshall said:
“Businesses will celebrate many of the Chancellor’s announcements today, although it is likely that the scale of the stimulus needed to help the UK economy restart, rebuild and renew will need to be greater still over the coming months.
“Targeted measures to help young people gain work experience and enter the labour market at this challenging time are welcome, and, so too is the focus on a greener recovery and the acceleration of key infrastructure projects. The VAT cut will help firms in the hospitality and tourism sectors working hard to restart after many months of lost revenue.
“Over the coming weeks the Chancellor will also need to address the ticking clock on a number of other key concerns – including the impending end of key business loan schemes, and the unanswered question around what support will be offered to businesses and communities that face local lockdowns.”
On the temporary VAT cut from 20% to 5% in the hospitality and tourism sectors, BCC Head of Economics Suren Thiru said:
“The Chancellor has listened to our call for a temporary cut in VAT which will kickstart consumer spending in some parts of the economy. This is a welcome step and will help to stimulate a more rapid pickup in activity in those sectors and supply chains hardest hit as the economy gradually reopens.
On ‘Eat Out to Help Out’ vouchers, BCC Head of Economics Suren Thiru said:
“While the Chancellor has listened to our call for a voucher scheme to incentivise consumer activity, the scale and scope of this scheme must be much bolder to make a material difference.”
On the Job Retention Bonus, BCC Head of People Policy Jane Gratton said:
“We look forward to seeing the detail of the job retention bonus to help safeguard jobs for some furloughed staff, but the best way to protect jobs is to reduce the overall cost of employment. Ministers must consider a cut in employer national insurance contributions in the coming months.
On the Apprenticeship Recovery Package, BCC Head of People Policy Jane Gratton said:
“The Chancellor has listened to our calls for a wage subsidy to help employers create high quality apprenticeships for young people entering the workforce in a difficult year.
“More should be done to support employers, including allowing apprentices to undertake much of the off the job training upfront to give employers more time to recover and ensure apprentices are better prepared to enter the workplace.
“We still need to see greater flexibility in the apprenticeship levy so that employers can help their people get the skills they need to succeed in an evolving workplace.”
On measures still needed, BBC Co-Executive Director Hannah Essex said:
“In the coming weeks the Government needs to consider taking further bold steps in response to this crisis.
“BCC’s research shows investment intentions have been hit hard during the pandemic, and so the Government should be preparing new incentives for business investment in the UK, including extending the £1 million Annual Investment Allowance for a further two years and broadening its scope to include training, the transition to net zero and spending on making workplaces Covid-secure.
“Businesses face cliff-edges in the autumn as existing support winds down, and so the Government must consider reducing national insurance contributions and extending existing loan schemes.
“Many businesses are concerned about how they will survive in the event of a local lockdown, and we ask the Government to urgently set out what support will be available if that happens.”
For all of the latest coronavirus news, updates and support, visit the Coronavirus Business Support Hub.
Source: Gov.uk / BBC News / BCC