The Chancellor’s last spending review was only four months ago. But today Rishi Sunak delivered a Summer Economic Update, as part of the government’s plans for economic recovery. Here’s what he announced.
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The government’s three-point Plan for Jobs is designed to give businesses “the confidence to retain and hire”. Many of the announcements are also geared towards encouraging consumer spending.
But the first significant update was about what happens next for the Coronavirus Job Retention Scheme (furlough scheme).
The Chancellor reiterated that the furlough scheme will wind down flexibly for UK businesses. The available grant will reduce each month from August before ending completely on 31 October.
After that, the government is encouraging businesses to retain employees with a £1,000 Job Retention bonus, for each furloughed employee that’s still employed as of 31 January 2021.
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Following the furlough scheme update, the Chancellor delivered his “Plan for Jobs” to help people find jobs, help businesses create jobs, and to encourage spending so businesses can protect jobs.
The Kickstart Scheme will help UK businesses create jobs for 16-24 year olds claiming Universal Credit and at risk of long-term unemployment.
The scheme will give employers 100 per cent of the National Living Wage for 25 hours a week of work per employee for six months, plus an amount to cover overheads.
There won’t be a cap on the places available.
The government will pay employers in England £2,000 for every apprentice they hire under 25, between August 2020 and January 2021.
It will also give employers £1,500 for apprentices over 25.
The government wants to make sure that young people have access to high-quality training. It’s spending money on tripling the scale of traineeships in England in 2020-21, tripling the number of sector-based work academy placements, and doubling the number of work coaches.
The government will give employers in England £1,000 per trainee they give work experience to.
This could help you find high-quality employees ready to work.
The government wants to create work by ‘getting Britain building’ and is investing £5.8 billion in:
Homeowners and landlords in England will be able to apply for vouchers worth up to £5,000 as part of the Green Homes Grant scheme, to help pay for energy-saving improvements like insulation, lighting and double-glazing.
Low-income households could get up to £10,000 for the upgrades.
This is good news for tradespeople, who will need to be on hand to help homeowners make the improvements.
In a headline announcement, the Chancellor revealed he’s scrapping stamp duty on homes up to £500,000 in England and Northern Ireland.
The government is hoping that this will encourage anyone thinking about moving or buying a new home to go ahead over the next few months. The cut will end on 31 March 2021.
This could help support building jobs and renovation work on homes.
In his pledge to restart the hospitality sector, Mr Sunak said he wanted to see “pubs, restaurants, cafes, and B&Bs bustling again”.
He announced two new measures to support one of the hardest hit parts of the UK economy due to lockdown.
The Chancellor has reduced UK VAT on food, accommodation and attractions to five per cent, down from its current 20 per cent, in a move welcomed by the hospitality and tourism sector.
Read more about whether or not you might consider registering for VAT as a small business.
The second measure announced to get the hospitality sector back on its feet has never been tried by a UK government before, according to the Chancellor. In a bid to get customers back into food establishments, he unveiled his “eat out to help out” initiative.
The scheme will give everyone in the UK a discount to use on Mondays to Wednesdays in August. Restaurants, cafes and pubs will be able to offer half price meals.
“Meals eaten at any participating business will be 50 per cent off up to a maximum discount of £10 per head for everyone, including children. We can all eat out to help out,” Mr Sunak said.
Businesses can register for the scheme using a website opening next Monday. Rather than giving diners vouchers, businesses will need to claim back the money, with the funds entering your account within five working days.
Some of the measures small business owners and others may have been expecting weren’t covered in the Chancellor’s Summer Statement this lunchtime. Here are a few to watch out for in the Autumn Budget and Spending Review due later this year.
Following the 2020-21 business rates holiday for retail, leisure and hospitality businesses, there have been calls to extend the rate cut to other businesses.
As a fundamental review of business rates is rumoured for the autumn, The Guardian predicted that, “exemptions or grants for some companies are more likely at this stage”. However, the Chancellor made no mention of business rates in his Summer Statement, leaving them off the table for now.
FT Adviser called out pensions in its recent Summer Statement predictions article, calling into question whether:
For now, neither point appears to be up for review, but this is also an area to keep an eye on when the Chancellor is due to make his speech this autumn.
Read more about pensions for the self-employed.
Talk of the introduction of a wealth tax has remained as speculation for now. However, as FT Adviser points out, there are a number of practical and political difficulties that would need to be addressed. This includes older people who may need their wealth to pay for future care costs.
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