Rishi Sunak’s Summer Statement
09th July 2020
The COVID-19 pandemic has put a major dent in the UK economy, not to mention the havoc it’s brought to people’s lives and families. With £160 billion already devoted to softening the blow, all eyes were on Chancellor Rishi Sunak as he stepped up to make his summer statement speech. Here’s a round-up of the main points from the announcement:
Stamp Duty and Home Improvements
One thing that stood out in the summer statement was the fact that loads of UK homebuyers won’t be charged stamp duty any more. Until the 31st of March next year, the threshold’s being bumped up from £125,000 to £500,000. That’s a pretty big boost for a lot of buyers, and should be good news for the struggling housing market in general.
On top of that, there’s help for homeowners trying to improve their energy efficiency. People putting in insulation will be able to get vouchers worth up to £10,000, depending on their situation.
Food, drink and accomodation
For obvious reasons, COVID-19’s taken a big bite out of UK tourism and the hospitality industry. To try to ease the pressure a bit, VAT rates on accommodation, food and “attractions” are coming down to just 5% for 6 months, from July to January. Obviously, we won’t know for a while how many businesses will be able or willing to pass much of this cut on to their customers. With the industry starving, it’d be pretty understandable if they just wanted to repair some of the damage already done.
Another, slightly more unorthodox, move is the “eat out to help out” scheme. Pubs, cafes and restaurants have all been suffering through the lockdown, so the Chancellor’s decided to try and get us all out and socialising again. The idea of the new scheme is simple enough. From Mondays to Wednesdays throughout August, you’ll be able to get vouchers for participating venues that’ll cut the cost of your food down by as much as 50%. The businesses will then be able to claim back the rest from the government. The discount you’ll get is limited to £10 per person, but even so it’ll bring down the price of a family outing by quite a lot.
Jobs and Training
Moving onto the employment outlook, we got an update on the Coronavirus Job Retention Scheme. The furlough system was built to protect jobs, but despite being extended once already it’s time is finally running out. From August, the burden of paying wages is starting to shift back toward employers, with government contributions tailing off until the scheme stops altogether at the end of October. Only when that shoe finally drops will we start to see the full picture in terms of job losses brought on by COVID-19.
As a way of limiting the damage, Rishi Sunak has set up a jobs retention bonus scheme. Basically, for each furloughed worker an employer keeps on between November and January, the government will cough up £1,000. As long as the employees earn at least £520 a month, they count for the scheme.
For people looking for work, a few new measures are coming in. For one thing, the number of work coaches available at the UK’s Jobcentres will be doubled. In addition, businesses are going to be rewarded more for taking on apprentices. This encouragement will be backed up with cold, hard cash, too, with firms able to grab £2,000 per young apprentice they bring in. For apprentices over 25, that bonus drops to £1,500, though. Also, this system won’t be sticking around forever, since it only applies to employers taking it up between August and January.
Sticking to the theme of helping younger people into work, the Chancellor announced that the government is committing to paying new employee’s wages for 6 months if they’re aged between 16 and 24. The move’s aimed at people who are on Universal Credit and at risk of being stuck without work long-term. About £2 billion is being poured into this 6-month system, which will see the government stepping in to pay national minimum wage rates for new workers for up to 25 hours a week. Employers will have the option to top this up, so it’ll be interesting to see how many stump up some cash of their own.
It’s a typical mixed-bag of announcements, with a lot of them being strictly short-term. However, with COVID-19 still breathing unhealthily down the necks of UK businesses, there’s more than a little good news here. The government’s moving into the next phase of its response to the pandemic, with a lot of delicate balances to strike. We’ll be keeping our ear to the ground as things move forward, so keep checking back for the latest news and updates.