Written by: Keith Tully
Updated: 8th July 2020
Chancellor of the Exchequer, Rishi Sunak, today delivered a special summer economic statement in parliament, outlining a series of measures to mitigate the long-term damage to the economy as a result of the Covid-19 coronavirus outbreak. While his focus was undoubtedly on both the creation and protection of jobs, there were also boosts given to the housing market and the hospitality industry. Here are the key points at a glance.
Coronavirus Job Retention Scheme (Furlough Scheme) - The furlough scheme will be gradually brought to an end, concluding at the end of October as previously announced. There were fears the end of the scheme could see a raft of redundancies as firms looked to cut costs when this financial safety net was removed. In today’s statement, Sunak introduced a bonus scheme which would give employers £1,000 for each and every furloughed member of staff still in their employment in January. This is estimated to cost the Treasury over £9bn if every job which is currently furloughed is protected.
VAT cuts – In a bid to support the hospitality sector – an industry which employs more than 2 million people - VAT on food, accommodation and tourist attractions will be cut from its current rate of 20% down to just 5%. This will take effect from Wednesday and will last until 12 January 2021. As an industry which has been disproportionately affected by lockdown measures, this move is designed to increase spending in this sector, saving both businesses and consumers money.
Discounts for Dining Out – In another move to reinvigorate the hospitality industry, a “eat out to help out” discount scheme was unveiled. This means food consumed at participating cafes and restaurants, Monday to Wednesday throughout August, will be partly subsidised by the government. Meals will be 50% off up to a maximum discount of £10 per person including children. A website will be launched on Monday which businesses will be able to register themselves through. Money can be claimed back through the government with a promise that this will be in their bank account within five working days.
Stamp Duty Cuts – Stamp duty for properties under £500,000 will be temporarily abolished. This represents a significant increase to the current threshold which is currently £125,000. After some speculation earlier this week that a cut to stamp duty would not take effect until the autumn, Sunak today confirmed this will be effective immediately and will run until 31 March 2021.
Tackling Youth Unemployment – Designed to create more jobs for young people, the Kickstart Scheme will cover the wages of young people entering new jobs. This will take the form of six-month work placements for individuals aged 16-24 who are currently on Universal Credit. It is yet to be seen what will happen to these jobs after the six-month period is over. Apprenticeship schemes will also be supported by way of bonuses paid to companies to take them on. A bonus of £2,000 per apprentice will be paid, with £1,500 given for apprentices over the age of 25. The apprenticeship scheme will run from August 2020 until January 2021.
Creating a Greener Home – The government will subsidise home improvements to help make homes more energy efficient. This includes contributions to installing double glazing and fitting cavity wall insulation. Homeowners would be expected to pay a percentage of the cost with the government picking up the tab for the remainder. Lower income households are expected to receive a bigger contribution to insulating their homes.
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