Summer Statement Summary
On the 9th July the Chancellor announced his Summer Statement to kick-start the economy. Rishi Sunak has pledged to “protect, support and create jobs” and get pubs and restaurants “bustling again”
The Chancellor has announced a 50% discount for diners to increase restaurant demand. Additionally, a large VAT cut has been confirmed for hospitality and tourism sectors.
VAT on certain items will decrease from 20% to 5% from 15 July to 12 January 2021. However, this reduced rate is only available on the following items:
- Non-alcoholic drinks
Every UK citizen will receive a “eat out to help out” discount. This discount will be valid from Monday to Wednesday in August from participating businesses. It will be a discount of 50% of up to £10 per head.
Stamp duty holiday
The Chancellor announced on Wednesday 8 July 2020 that the threshold for stamp duty in England and Northern Ireland would be temporarily raised from £125,000 to £500,000 until 31 March 2021. The aim of this is to increase activity in the property market. This will also help house buyers that have been financially affected by a coronavirus.
The Government says that “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.”
Jobs and training
Job retention bonus: The Government will pay employers £1,000 for every furloughed employee brought back to work by the end of January 2021. It has been calculated that if every furloughed worker is brought back to work the scheme will cost £9 billion. For employers to be valid for this scheme, the employee must earn a monthly average of more than £520 in November, December, and January.
£2bn Kickstart Scheme: This scheme will create jobs for unemployed young people, which will enable employers to offer young people between the age of 16-24 years old a six-month placement. The Treasury will cover the National Minimum Wage for each young employee a company employs for up to 25 hours a week. With companies topping up workers’ pay if they choose to employ them for longer hours.
The government is also investing in traineeships and apprenticeships. The government will offer £1,000 per trainee to businesses. (Capped at 10 jobs per firm).
New apprentice under 25 years old: Businesses will receive grants of up to £2,000 for each new apprentice employed.
New apprentice over 25 years old: Businesses will receive grants of up to £1,500 for each new apprentice employed.
The National Careers Service will receive a funding increase of £32m over the next two years.
Rishi Sunak announces £2bn home insulation scheme
The Chancellor has announced a £2bn grant scheme for homeowners for energy-saving home improvements, this is part of a wider £3bn project to cut emissions. The Treasury has said that this funding would help support over 100,000 jobs. Households will receive vouchers for up to £5,000 and the poorest households will receive up to £10,000 for their energy-saving home improvements.
The scheme known as the Green Homes Grant will mean that the government will cover two-thirds of home improvement costs that will save energy. This scheme will start in September.
It is clear to see that the Chancellor’s priority is to kick-start the economy after the coronavirus pandemic, by protecting, supporting, and creating jobs. He is also attempting to create demand in the hospitality sector by offering UK citizens the “eat out to help out” discount. However, all of this has resulted in the government borrowing more money to fund the restart of the UK economy, which could cost the country more in the long run.
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