Summer statement 2020: Stamp duty and VAT cuts, half-price meals and Kickstart Scheme unveiled by Chancellor Rishi Sunak
A jobs retention bonus, stamp duty and VAT cuts, green jobs, a kickstart scheme for young workers and an ‘Eat Out to Help Out’ scheme - these were the key measures as the Chancellor set out a £30billion investment to aid the country’s recovery from the coronavirus in his summer economic statement.
Faced with the deepest global recession since records began, the British economy contracted by 25 per cent in two months - the same amount that it grew in the previous 18 years.
Chancellor Rishi Sunak addressed the House of Commons with a set of measures under the catchphrase to “support people to find jobs, create jobs and protect jobs”.
The measures include:
- A jobs retention bonus will be paid to employers who bring a furloughed worker back and continue to employ them to January. The bonus will be £1,000, and the employee must be paid £520 each month through to January to qualify.
- Under the £2billion Kickstart Scheme, the government will pay towards six months of wage costs of 16 to 24-year-olds at risk of long-term unemployment who are hired by employers. It will cover 100 per cent of the minimum wage for a maximum of 25 hours a week — with firms able to top up wages.
- The government will pay employers £1,000 to take on trainees, and provide £100m to create places on Level 2 and 3 courses.
- The doubling of front line staff at job centres, as well as an extra £32m for recruiting extra careers advisors and £17m for work academies in England
- A £2billion Green Homes grant will seek to help homeowners and landlords make homes more energy efficient and create local jobs. The grants will cover at least two thirds of the cost, up to £5,000 per household.
- There will be a release of £1billion of funding to improve the energy efficiency of public sector buildings.
- The aim is to create 140,000 ‘green’ jobs.
- There will be a temporary stamp duty holiday on the first £500,000 of all property sales in England and Northern Ireland until March 31, 2021.
- It is a levy paid on land or property sold for £125,000 or more - although first-time buyers pay no tax up to £300,000 - and will be increased to £500,000 until next year.
- VAT will be cut from 20 per cent to 5 per cent on eat-in or hot takeaway food and non-alcoholic drinks from restaurants, cafes and pubs; accommodation in hotels, B&Bs, campsites and caravan sites; and attractions, such as cinemas, zoos and theme parks. It will apply from next Wednesday until January 12.
- An Eat Out to Help Out scheme will run during August, with the government giving everyone 50 per cent off in participating restaurants up to £10 per head for adults and children from Monday to Wednesday.
Mr Sunak finished his speech by saying: "This has never just been a question of economics, but of values: I believe in the British people’s fortitude and endurance.”
“And it is that value, endurance, more than any other, we need to embody now. We will not be defined by the crisis but our response to it.”
Responding to the statement, Stuart Wilkinson, EY’s head of tax in the East of England, said: “The Chancellor delivered an economic statement that may not have been heralded as a Budget, but nonetheless delivered some significant changes to the country’s taxation and spending regime. In what was clearly a ‘tax less, spend more’ statement, Rishi Sunak delivered not just a VAT cut for the few, but spending grants for the many.
“On the few, we saw VAT cuts for those in hospitality and leisure,whilst on the many there was an effort to encourage people to eat out (but only at the start of the week) or to improve their green footprints (through making their houses more energy efficient).
“The six-month targeted VAT cut may bring a smile to the face of restauranteurs but won’t apply to any alcoholic tipple that accompanies the food.Combined with the £10 ‘Eat out to help out’ half-price offer per dinner per meal, this Chancellor has been putting his money where his mouth is.
“Combined with a similar cut for accommodation and attractions, the Chancellor has been showing his ‘get up and go’ characteristics.
“Beyond this, the cut in stamp duty was clearly intended to stimulate house moves.
“But the largest impact was to address those fearing the effect of furlough cold turkey, or the young facing a troubled job market. With a grant of £1,000 per furloughed employee retained through to the end of January next year, this element of the Chancellor’s help may be small compared to the salary costs (effectively just over £300 per month), but will be welcome nonetheless.
“Whether this is enough to stop redundancies is yet to be seen. Also, this scheme may leave a sour taste in the mouth for those businesses which have struggled on without furloughing workers and be seen as unfair in relation to those who worked throughout the lockdown.
“For those entering the job market, the Chancellor’s Kickstart scheme is set to attract up to 400,000 young people, who companies can take on, with the government grant paying the minimum wage for six months.”
Dame Carolyn Fairbairn, the CBI director-general, added: “The Chancellor is absolutely right to prioritise jobs in his summer statement. Flattening the daunting unemployment curve about to hit our country could not be more important. Joblessness scars lives and hits the young and most disadvantaged hardest.
“Today’s jobs plan is an important step forward.For young people, the Kickstarter Scheme will help create jobs in the short-run that can turn into opportunities for the long-run, and firms look forward to working with government to get it up and running quickly and well. It is also good to see direct support for apprenticeships and careers advice, which will help build the skills as well as the jobs of the future.
“New investment in green growth will spur job creation on the road to net zero, while revitalizing demand through targeted VAT cuts for hospitality, an imaginative voucher scheme and stamp duty relief will be warmly welcomed by many businesses and help give consumers confidence to spend.
“But prevention is better than cure. Many viable firms are facing maximum jeopardy right now. The job retention bonus will help firms protect jobs. But with nearly 70 per cent of firms running low on cash, and three in four reporting lack of demand, more immediate direct support for firms, from grants to further business rates relief, is still urgently needed.
“The Chancellor must continue to balance the need to invest in a long-term, sustainable recovery while responding to the urgent challenges that companies are experiencing today.”
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