Rishi Sunak’s Summer Economic Update – The highlights
Chancellor Rishi Sunak has just delivered his Summer Economic Budget. His plan has been designed to mitigate the impact of Coronavirus with jobs at the heart of the announcements. The immediate focus is to be on jobs and unemployment.
Phrases used included:
- ‘The Government will do all we can’
- ‘Hardship lies ahead’
- We will protect support and create jobs across every part of the country’ ‘Unencumbered by the dogma, we will do what is right.’
The challenge, as Rishi Sunak outlined it, was to overcome the significant impact of Coronavirus to the UK economy.
He started by summarising the support that the government has already provided through the Coronavirus Job Retention Scheme, the VAT and other tax deferrals, the grants, the Bounce Back and CBILS loans and also the additional funding received by public services throughout the period.
He talked of the profound economic challenges that lie ahead with the International Monetary Fund forecasting the deepest global recession since records began.
He reminded us, as if we needed it:
- Businesses had just stopped as we went into Lockdown
- Household consumption has reduced drastically
- The economy has contracted by 25%, equivalent to the growth experienced over the previous 18 years
He talked of significant job losses to come and said that the job of supporting the economy and society has only just begun.
Moving on to the detail the Chancellor described the Job Retention Scheme as the linchpin of the support that had been provided for the economy. He explained that leaving it open would give false hope, so said there would be no change to the planned winding down of the scheme.
Instead he announced a new policy to reward and incentivise employers, and several other schemes to help boost the economy and attempt to protect jobs and help businesses.
The initial details for each of these schemes is outlined below:
The Job Retention Bonus
For any employer who brings back employees who have been furloughed, and keeps them employed to the end of January 2021, there will be a £1,000 bonus per employee. To qualify employees must receive a minimum level of £520 monthly pay between November 2020 and January 2021.
This bonus is available for ALL employees who have been furloughed during the pandemic.
The Kick Start Scheme
Younger people are the hardest hit in terms of retaining and finding jobs.
For employers who recruit 16 to 24 year olds into new jobs, working a minimum of 25 hours per week and who are paid the equivalent of national minimum wage and receive training and support, the Government will pay six months of their salary as well as an element of the overheads.
This is a non-repayable grant of up to £6,500 per employee.
Businesses will be able to apply from August. There will be no cap on the places available for this scheme.
Employers will receive £1,000 per Trainee.
The number of places available under this scheme will be trebled.
The Government will reward employers who create Apprenticeships in the next six months. A new bonus will be available to employers of up to £2,000 per new Apprentice recruited.
If employers recruit over 25 year olds they will receive £1,500.
Green Homes Grant
This new grant offers £2billion, effective September. This will be available as vouchers that can be used to improve energy efficiency within households.
Up to £5,000 will be available per household to cover 2/3 of the cost of energy efficiency improvements. For low income homes this will increase to £10,000 and cover the entire cost of these energy efficiency improvements.
No Stamp Duty is currently payable on property purchases below £125,000. With immediate effect this limit will rise to £500,000. This is a temporary measure and expires on the 31st of March 2021 .
Hospitality & Tourism
This sector employs 2 million employees, 1.4 million of whom have been furloughed. Two announcements were made to encourage the restarting of these sectors for maximum recovery within the economy.
For the next six months this sector will see a reduction in VAT from 20% to 5%. This will take effect on Wednesday 15th July, and remain in place until 12th of January 2021.
Eat Out to Help Out
To encourage customers back into restaurants, cafes and pubs, the Government will provide a discount on the cost of meals to anyone in the UK who eats out during August 2020, on the following basis:
- Meals must be eaten at a restaurant, pub or cafe who has joined the scheme.
- Meals must be eaten on Monday, Tuesday or Wednesday.
- The discount will be 50% of the cost of the meal, up to a maximum of £10 per head (including children)
If they choose to take part, hospitality businesses will register through a website which will open next week. They will then be able to submit a weekly claim online and receive the cash into their bank account within five working days.
The Chancellor only sat down around forty minutes ago as I publish this, so these announcements are very new, and the small print is not yet available!
As soon as we receive more details we will of course pass it on to you. In the meantime if you have any questions around reopening your business, any of the existing grants, schemes or supports please do get in touch!