Chancellor Rishi Sunak’s Summer Economic Statement – Summary

 

Chancellor Rishi Sunak delivered his Summer Economic Update speech to the House of Commons today, Wednesday 8th July 2020. The key aspect of his speech was to “Protect, Support and Create” jobs. 

The main points discussed in his second stage recovery plan have been summarised below:-

 

Step 1 – Supporting Jobs

Furlough/ job retention scheme – the furlough scheme will continue to wind down gradually, protecting jobs until October 2020, as originally planned.

 

Job Retention Bonus

  • Any employer who brings an employee back off furlough, and keeps them in a job until the end of January, will get a £1,000 bonus.
  • This £1,000 bonus can be claimed for each employee brought back full time from furlough.
  • To get the bonus, firms must pay at least £520 each month from November to the end of January.

 

Kick Start Scheme

  • This fund will subsidise six-month work placements for people on Universal Credit aged between 16 and 24, who are at risk of long-term unemployment.
  • The government will cover 100% of the costs for a minimum 25-hour week at national minimum wage, with a maximum grant of £6,500 per new recruit.
  • National Minimum Wage is as follows:

        – £4.55 for under 18s,

        – £6.45 for 18 to 20-year-olds, and

        – £8.20 for 21 to 24-year-olds.

  • Employers will be able to top up that payment if they wish.
  • These roles that are opening to young people must include quality training and various opportunities to build their skills in the workplace.
  • This scheme will open for applications in August and there is currently no cap on the number of places funded.

 

Apprenticeships

  • For the next six months the government are going to pay employers to create and offer new apprenticeships.
  • Employers can receive £2,000 per apprentice between the ages 16 and 24
  • Employers can receive £1,500 per apprentice ages 25+
  • This money will be in addition to the existing £1,000 payment the Government already provides for new 16 to 18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan.

 

Step 2 – Job creation

Announcement today is for England only and the plan will create tens of thousands of jobs through bringing forward work on £8.8 billion of new infrastructure, decarbonisation and maintenance projects with a focus on energy-saving improvements to go green.

Funds are to be made available to Northern Ireland and more specific detail will be announced by the Northern Ireland Executive in the coming weeks.

 

Step 3 – Protect jobs

The chancellor has announced two measures to protect jobs with particular focus put on the worst hit sector, the Hospitality & Tourism sector:

 

1st measure

  • VAT for hospitality and tourism related activities will be cut to 5% as opposed to the current 20% and this will apply to food, accommodation and attractions for the next 6 months.
  • Starting Wednesday 15th July 2020 and ending 31st January 2021.
  • This temporary VAT cut for the hospitality sector does not include alcoholic drinks.

 

2nd measure

  • For the month of August 2020 everyone will receive an “Eat Out to Help Out” discount of 50% on all sit-down meals purchased from participating restaurants, bars, pubs or cafes between Monday to Wednesday;
  • Cap at £10 per head, including children.
  • As a customer you do not need to do anything to claim your discount from the participating businesses, it will be automatically applied to your meal so long as the venue has signed up to the Government’s scheme.
  • The discount can be used “unlimited times” on eligible days when dining in but will only include non-alcoholic drinks.
  • Businesses will need to register, and can do so through a simple website which is open from Monday 13th July 2020. Each week in August, businesses can then claim the money back, with the funds in their bank account within 5 working days.

 

Stamp Duty

Property transactions fell by 50% in the last few months, therefore to increase this market again:

  • The government has increased the 0% stamp duty threshold from £125,000 to £500,000 for property sales in England and Northern Ireland.
  • People buying second homes and buy-to-let properties will also benefit, but will still have to pay the extra duty at 3% that is due on the entire price.
  • The average stamp duty bill will fall by £4,500 and nearly nine out of 10 people buying a main home this year, will pay no stamp duty at all.
  • This takes effect from today until 31st March 2021.

 

Other

Employers will not have to pay any tax on coronavirus swab tests provided for their staff.

 

 

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