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Plan to protect, create and support employment

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On 8, July 2020 the Chancellor Rishi Sunak released his Summer Economic Statement. The Chancellor began by noting that the economy contracted by 25% since the beginning of the year which is the same level that it had grown in the previous 18 years. The focus was then on the Government’s plans for its second phase in response to the COVID-19 crisis with a newly announced plan for employment.

There was a lot in this statement for businesses to digest so here we break down some of the key initiatives announced.

Furlough Scheme wind down

  • The furlough scheme will wind down flexibly and gradually until the end of October.
  • A new Job Retention Bonus announced to “reward and incentivise” employers to bring back furloughed employees.
  • UK employers will receive a one-off bonus of £1,000 for each furloughed employee who remains continuously employed through to the end of January 2021.
  • Employees must be paid £520 on average per month between the end of the Coronavirus Job Retention Scheme and end of January 2021.
  • Trainees and apprenticeships

    • The Government will introduce a £2 billion Kickstart Scheme to create 6-month work placements for 16-24 year olds who are on Universal Credit and at risk of long term unemployment. Funding will cover 100% of the National Minimum Wage for 25 hours a week, plus the employer’s National Insurance contributions.
    • Apprenticeships in England will be supported through the provision of bonuses for companies, with £2,000 available for each apprentice they take on, and a £1,500 payment for each new apprentice they hire aged 25 and over. This will run until January 2021.

    Hospitality and Tourism sector

    • An “Eat Out to Help Out” scheme is being introduced to encourage people to eat out at restaurants. This will give every diner a 50% discount of up to £10 a head at any participating restaurants between Monday and Wednesday every week for August 2020.
    • VAT cut to 5% for food and non-alcoholic drinks from restaurants, pubs, bars and cafes from 15 July 2020 until 12 January 2021.
    • VAT will also be cut to 5% for accommodation and admission to attractions across the UK from 15 July 2020 until 12 January 2021.

    Housing sector

    • Stamp duty to be cut temporarily on properties in England up to £500,000 with immediate effect and running until 31 March 2021.
    • The Government will provide £2 billion to support homeowners and landlords in England to make homes more efficient, and in doing so support 100,000 jobs.
    • A Green Homes Grant will be introduced providing £2 for every £1 homeowners spend on making their homes more energy efficient, capped at £5,000 a household. For the lowest income people, this will be fully funded up to £10,000.

    Infrastructure and construction

    • The Government is accelerating £8.6 billion of capital spending, allowing infrastructure projects to begin sooner than previously planned.
    • Included is the previously announced (in June) over £5 billion of infrastructure projects to support the recovery of the economy and begin to transform UK infrastructure.
    • Construction projects to get Britain building will include amongst other things hospital maintenance, local road networks, school maintenance/rebuilding and local projects for areas most in need.

    Devolved Administrations

    • Whilst some of the policy measures only apply in England, the Chancellor noted in his speech that "today's support is only possible because we are a United Kingdom", with support being provided directly to people and businesses in Scotland, Wales and Northern Ireland through the UK-wide measures.
    • In addition it was stated that the devolved administrations will receive funding through the Barnett formula and devolved tax fiscal frameworks.

    The Chancellor didn’t rule out further Government assistance going forward to protect jobs and support businesses. The third phase of the Government’s response to the crisis, involving the rebuilding of the economy, is expected to be unveiled in the Autumn budget later this year.

    Information within this article is correct as of 31.07.20. As information is changing all of the time, refer to https://www.gov.uk/coronavirus for the most up to date information.

POSTED IN: Day to Day Banking,2020

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