Britons eating out will get discounted food, house buyers will pay less stamp duty and companies will get bonuses for retaining workers under the chancellor’s plans to kickstart the UK economy.
In his summer economic update to the House of Commons, Rishi Sunak warned the UK is facing “profound economic challenges” as a result of the coronavirus crisis.
The chancellor admitted Britons are anxious about losing their jobs and rising unemployment, with the UK economy having shrunk 25% in just two months – the same amount it grew in the previous 18 years.
But Mr Sunak told MPs: “We’re not just going to accept this. People need to know we will do all we can to give everyone the opportunity of good and secure work.
“People need to know that although hardship lies ahead, no one will be left without hope.”
He vowed to turn the UK’s national recovery “into millions of stories of personal renewal” as he unveiled a £30bn package of measures.
- a £1,000 bonus for each worker that companies bring back from furlough and employ through to January next year;
- a “kickstart scheme” to directly pay firms to create jobs for 16 to 24-year-olds;
- cash for businesses to take on trainees and apprentices;
- an eight-month temporary cut in stamp duty, with no charge on property transactions below £500,000;
- a cut in VAT on food, accommodation and attractions from 20% to 5% until 12 January;
- an “Eat Out to Help Out” discount of up to £10 per head to get Britons back to restaurants, cafes and pubs.
After announcing what he dubbed a “plan for jobs”, Mr Sunak told the Commons: “We will not be defined by this crisis, but by our response to it.
“It is an unambiguous choice to make this moment meaningful for our country in a way that transcends the frustration and loss of recent months.
“It is a plan to turn our national recovery into millions of stories of personal renewal.”
In his announcement of an immediate cut to stamp duty, which will last until 31 March next year, Mr Sunak revealed he was lifting the threshold on paying stamp duty from, currently, property transactions above £125,000 to transactions above £500,000.
He told MPs: “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.”
And, saying he is ready to “act with a plan for jobs”, Mr Sunak also announced he will pay companies £1,000 for each employee they bring back from the government’s jobs retention scheme, which has supported more than nine million workers but is due to end in October.
He said the new bonus scheme could cost around £9bn if every furloughed employee was retained by their firms, telling company bosses: “If you stand by your workers, we will stand by you.”
The chancellor added: “If you’re an employer and you bring back someone who was furloughed – and continuously employ them through to January – we’ll pay you a £1,000 bonus per employee.
“It’s vital people aren’t just returning for the sake of it – they need to be doing decent work.
“So for businesses to get the bonus, the employee must be paid at least £520 on average, in each month from November to the end of January – the equivalent of the lower earnings limit in national insurance.”
In what has been described as a “mini-Budget”, the chancellor also presented plans to get pubs, restaurants, cafes and B&Bs “bustling again”.
For the next six months, from 15 July to 12 January, Mr Sunak will cut VAT from 20% to 5% on food from restaurants, cafes and pubs, accommodation in hotels, B&Bs, campsites and caravan sits, and attractions such as cinemas, theme parks and zoos.
The chancellor also hailed a “creative” scheme to give everyone in the country an “Eat Out to Help Out” discount during August.
“Meals eaten at any participating business, Monday to Wednesday, will be 50% off, up to a maximum discount of £10 per head for everyone, including children,” he said.
Mr Sunak told MPs that such a scheme “has never been tried in the UK before”.
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Having warned that younger people will be “hardest hit” by the COVID-19 crisis, the chancellor confirmed plans for a £2bn “Kickstart Scheme”.
Firms will be paid by the Treasury to employ people aged 16-24, for 25 hours of work a week for up to six months.
The chancellor will pay employers the entire cost of the minimum wage for those they give temporary jobs to under the scheme, which is open to people on Universal Credit being helped by a “work coach”.
The Treasury expects each young person employed to cost them around £6,000-£7,000 to pay this salary, which is currently £4.55 for those under 18, £6.45 for those aged 18-20 and £8.20 for those aged 21-24.
For the next six months, the government will also pay employers to create new apprenticeships, with a new payment of £2,000 per apprentice and a £1,500 bonus for businesses to hire apprentices aged 25 and over.
In addition, firms will be paid £1,000 to take on new trainees.
Labour’s shadow chancellor Anneliese Dodds urged the government to get its test, track and isolate programme for limiting coronavirus infections “working properly”, as she warned that “fear is hurting our economy”.
“The best the government can do to boost demand is to give consumers and workers the confidence and psychological security that they can go out to work, to shop, and to socialise in safety,” she said.
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Ms Dodds also called for Mr Sunak to abandon a “one size fits all approach” to withdrawing support schemes for furloughed and self-employed workers.
“We need a strategy for the scheme to become more flexible so it can support those businesses forced to close again because of additional localised lockdowns,” she said.
“There is still time to avoid additional floods of redundancy notices. It is the government’s duty to help Britain through this.”