On 8 July 2020, the Chancellor of the Exchequer made his Summer Economic Update – referred to as the mini-Budget by many commentators – which is essentially a ‘Plan for Jobs’ in the wake of the coronavirus pandemic.
This is the second part of a three-stage plan to support the UK’s recovery from COVID-19 and the associated disruption:
- Phase 1: Focus on Support. 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 via the furlough scheme and supporting over a million businesses through grants, loans and rate cuts.
- Phase 2: Focus on Jobs. 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.
- Phase 3: Focus on Rebuilding. To be announced in the Budget and Spending Review in the Autumn.
The Chancellor’s plans are designed to boost the economy in several ways:
The Chancellor said his measures were designed to protect, support and create jobs and at £30billion, the jobs bonus was the biggest ticket item in the statement:
- A new Kickstart Scheme will help the under 25s find work. The Scheme will pay employers to create new jobs for 16-24 year olds at risk of long-term unemployment. An initial £2billion has been made available and there will be no cap on the number of places available.
- To increase apprentice roles, the government will pay companies taking them on £2,000 (in addition to the Apprenticeship Levy) and £1,500 for apprentices over 25.
- To triple traineeships, companies taking on trainees will receive £1,000.
- A new Job Retention Bonus Programme will incentivise and reward employers to return furloughed staff back to work (the furlough scheme ends on 31 October). Every employer will receive a one-off £1,000 payment for each employee reinstated. There is no cap and the Treasury is prepared to pay £9billion if all nine million furloughed employees return to the workplace.
- The amount of work coaches in job centres will be doubled and the Department for Work and Pensions will receive £1billion funding to get people back into employment.
Boosting the Hospitality Sector
The hospitality sector is one of the biggest employers in the UK and one of the most severely impacted, with more than 1.4 million workers on furlough. £4billion has been pledged to the hospitality and tourism sectors in a package that could save households £160 per year on average and support over 2.4 million staff at over 150,000 businesses:
- VAT on food, non-alcoholic drinks, accommodation, and attractions has been cut from 20% to 5% for six months, which is estimated to cut the tax bill for 150,000 businesses by £4billion.
- An "Eat Out to Help Out" discount will be available in August at participating businesses, where meals and non-alcoholic drinks will be half price, to the value of £10 per head. Businesses receive the balance from the government within five working days.
Boosting the Housing Market
The Government's annual revenue from stamp duty is around £12billion, according to the latest figures released by HM Revenue and Customs. Yet as house prices have fallen for the first time in eight years, the Chancellor is making changes to stamp duty to drive growth and support jobs across the housebuilding and property sectors.
- A Stamp Duty Holiday, meaning that no Stamp Duty will be paid on homes up to £500,000 in England and Northern Ireland, will last until the end of March 2021. Previously, stamp duty had to be paid on homes over £125,000 in value. This is predicted to save homebuyers an average of £4,500 and the Chancellor predicted that nearly nine out of ten people buying a home this year in England and Northern Ireland will pay no Stamp Duty.
Boosting the Green Economy
The Chancellor has said he wants the recovery to have ‘concern for the environment at its heart' and announced measures to make 650,000 homes more energy efficient, save households up to £300 on their annual bills, cut carbon emissions by 500,000 tonnes and support 140,000 jobs.
- A new £2billion Green Homes Grant from September will mean homeowners and landlords can get grants up to £5,000 for insulation and other energy efficiency measures. The grant can be used for loft, wall and floor insulation, eco-friendly boilers, heat pumps, double or triple-glazed windows, low energy lighting and energy efficient doors.
- A new Green Jobs Challenge Fund will create 5,000 jobs within environmental charities and public authorities.
- £1billion has been pledged to improve the energy efficiency and low carbon heating for schools, hospitals, prisons, military bases and other public buildings and £50 million to pilot ways to cut carbon from social housing.
- Support for the electric vehicle charging infrastructure will mean that drivers of electric cars will never be more than 30 miles from a rapid charging station.
You can find out more information about the Chancellors Economic Update – and read his entire speech – on the ‘Plan for Jobs’ page on the Government’s website.