8 Jul 2020
UK Economic Update
- A new job retention bonus for employers who bring back furloughed staff, payable in January.
- A Kickstart Scheme of £2bn to create thousands of permanent job placements for young people.
- Businesses will be paid up to £2k per apprentice hired, and £1k for trainees hired.
- Temporary cut to VAT on catering (but not alcoholic drink) accommodation and attractions from 20% to 5% until January 2021.
- The chancellor announced a temporary change to stamp duty - effective immediately and increasing the threshold to £500,000, saving up to £15,000.
- A £2bn "Green Homes Grant" of up to £5k for homeowners and landlords to help make homes more energy efficient - increased to up to £10k for low income households.
- £100m investment for local roads and a £1bn fund to boost regional economies.
- "Eat out to help out" vouchers to give diners 50% off their meals out, or up to £10 per head, for the month of August.
The first stage was 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 and supporting over a million businesses through grants, loans and rates cuts.
As the UK enters the second phase in its recovery, the Chancellor’s plan is designed to support jobs by focussing on skills and young people, create jobs with investment in shovel-ready projects and greening our infrastructure, and protect jobs through a VAT cut for the hospitality sector and a landmark Eat Out to Help Out discount scheme for diners.
The Chancellor said that following this second phase focusing on jobs, there will be a third phase focusing on rebuilding, with a Budget and Spending Review in the autumn.
Supporting JobsA new £2 billion Kickstart Scheme will also be launched to create hundreds of thousands of new, fully subsidised jobs for young people across the country. Those aged 16-24, claiming Universal Credit and at risk of long-term unemployment, will be eligible. Funding available for each six-month job placement will cover 100% of the National Minimum Wage for 25 hours a week – and employers will be able to top this wage up. A total of £1.6 billion will be invested in scaling up employment support schemes, training and apprenticeships to help people looking for a job. Young people, who are amongst the worst hit by the crisis, will benefit from this. This includes: Businesses will be given £2,000 for each new apprentice they hire under the age of 25. This is in addition to the existing £1,000 payment the Government already provides for new 16-18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan. A £111 million investment to triple the scale of traineeships in 2020-21 ensuring more young people have access to high quality training. £17 million of funding to triple the number of sector-based work academy placements in 2020-21 Nearly £900 million to double the number of work coaches to 27,000; Over a quarter of a million more young people to benefit from an extra £32 million investment in the National Careers Service.
Stamp DutyAn introduction for a temporary increase to the Nil Rate Band of Residential SDLT (Stamp Duty) from £125,000 to £500,000 until 31 March 2021. In England and Northern Ireland nearly 9 out of 10 people getting on or moving up the property ladder will pay no Stamp Duty at all. This will drive growth and support jobs across the housebuilding and property sectors.
Temporary cut to VATEnsuring there is enough demand as businesses reopen is key to helping these businesses recover and have the confidence to protect jobs and rehire. Therefore, to encourage people to safely return to eating out at restaurants the Government’s new Eat Out to Help Out discount scheme will provide a 50% reduction for sit-down meals in cafes, restaurants and pubs across the UK from Monday to Wednesday every week throughout August 2020. The rate of VAT applied on most tourism and hospitality-related activities will also be cut from 20% to 5%. This will save households around £160 per year on average and, together with the Eat Out to Help Out Scheme, will support over 2.4 million staff at over 150,000 businesses, helping them recover and reopen after the Covid-19 lockdown. This will give these businesses the confidence to maintain their staff, as more people get through the door and business activity kick-starts again.
Job Retention BonusAs part of the plan to support jobs, a Job Retention Bonus will be introduced to help firms keep furloughed workers. UK Employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021.
Green Homes GrantThe plan will also create tens of thousands of jobs through bringing forward work on £8.8 billion of new infrastructure, decarbonisation and maintenance projects. This includes a £3 billion green investment package that could help support around 140,000 green jobs and upgrade buildings and reduce emissions. As part of this package homeowners and landlords in England will be able to apply for vouchers from a £2 billion Green Homes Grant scheme this year to pay for green improvements such as loft, wall and floor insulation that could save some households hundreds of pounds a year on their energy bills while creating thousands of jobs for tradespeople. And a £1 billion programme will make public buildings, including schools and hospitals, greener, helping the country meet its ambitions of achieving Net Zero by 2050, whilst investing in our future prosperity.
We will update you with further information as and when it becomes available. If you would like to discuss anything further, please contact your usual MHA Monahans representative or contact your local office.