Published on July 8th, 2020 | by The GC Team0
Chancellor’s Summer Statement: “The Re-opening”
Chancellor of the Exchequer Rishi Sunak has just sat down after delivering his Summer Statement in the House of Commons. Having prefaced it as “Stage 2 – The Re-opening.”
But he warned at the outset that, even with the UK economy suffering a 25% contraction in just 2 months, and the OBR expecting “significant job losses” imminently, the Job Retention Scheme cannot stay open indefinitely, and will be wound down “flexibly and gradually” to its close in October 2020. A new plan for jobs – their retention, creation and support – is the priority now to avert a mass migration from furlough to redundancies this Autumn.
In bringing his new plan for UK jobs forward, Mr Sunak switched from Status Quo to The Carpenters: the rousing “Whatever it Takes” promise of March replaced by today’s soothing, long-term commitment: “We’ve Only Just Begun.”
Is there much in it for independent retailers and small businesses? The full text can be found on the Government website, but we have pulled a few things from it that may be of interest.
First, the “New Policy” to soften the impact of the end of the Job Retention Scheme is the new Jobs Retention Bonus. The Chancellor promises employers that, for every one of their employees who is taken off furlough and remains employed with them until at least January 2021, earning at least £500 a month, the Government will pay the employer a £1,000 bonus. This could be the difference between reluctantly letting a furloughed employee go in October, and holding on to them into the New Year when things might be financially easier.
He also announced plans aimed specifically at getting young people into jobs. The Government will pay employers to create new jobs for young people via its “Kickstart Scheme,” whereby the Government will pay to employers 100% of the wages of new young employees who are working for at least 25 hours a week at at least minimum wage, for six months, plus a “contribution to overheads” associated with employment. The scheme starts “this Autumn,” with an initial £2 billion available, but, says Mr Sunak, with “no cap.”
The raising of the threshold for stamp duty on house sales to £500,000 until 31 March 2021 could stimulate still further the pent-up activity in the housing market. Selling and buying homes often means new appliances, and together with Boris Johnson’s “Build, Build, Build” mantra there’s some hope that the housing market will really pick up.
VAT on sales from entertainment businesses – pubs, restaurants and the like – has been cut from 20% to 5%, sending the somewhat mixed message: “be careful and responsible and mindful of the whole community, but at the same time get out there, eat, drink, socialise and spend your money.”
Building up to his big finish, the Chancellor enthused “this moment is unique,” before announcing a measure that, in some curious way, he seemed to want to be his defining moment in office: “Eat Out to Help Out,” (don’t they love a slogan). Everyone in this United Kingdom will be given, on request, a Government voucher to eat out once in August (Monday-Thursday) at a 50% discount. The Government will reimburse the establishment where the meal is purchased (but, as ever, T&Cs apply).
It’s not all bad, but some of it is a little bit strange…