2020 Summer Statement: What You Need to Know

Published: 9th July 2020
 
Chancellor Rishi Sunak has delivered his summer statement, which aims to help the UK economy recover from the devastating impact of the coronavirus pandemic and lockdown.  It includes plans to safeguard jobs, help young workers into employment and boost consumer spending in areas that have been particularly hard hit, with measures such as a VAT cut for the hospitality sector.
 
Rishi Sunak delivers Summer Statement

 

 

Key Points at a Glance

 
Jobs & Training – a jobs retention bonus for companies retaining furloughed staff and a job creation scheme for young people

Housing – a stamp duty holiday on properties up to £500k

Hospitality & Tourism – a plan to drive consumer spending with VAT cuts and discount scheme

The Arts – a rescue package to safeguard the arts and heritage sectors

Environment – investment to decarbonise homes and public buildings

 

 

Jobs & Training

 Jobs Man
The objectives are to protect, create and support employment.
The furlough scheme has helped over 11m people to date, but will now gradually wind down, finishing at the end of October. The chancellor launched a jobs retention bonus: firms will be rewarded £1,000 for every furloughed employee retained to the end of January 2021.
 
Apprenticeships will be supported by bonuses, with companies receiving payments for every apprentice they take on. (£2000 for under 25’s).
 
Sunak announced a ‘kickstart’ job creation scheme to get young people into work. The government will pay the wages of new young employees for 6 months until mid-January 2021. (This applies to 16-24-year-olds on Universal Credit). There will also be a £1,000 grant per trainee (aged 16-24) for employers who offer work experience placements in England.

 
HelloGrads comment: ‘This £2bn Kickstart scheme is a good start and comes at a time of huge concern for job security; it will allow under 25s to benefit from paid industry experience with valuable training and support. 
 
However, there is some scepticism that these measures are too short-term, more akin to providing work experience than jobs creation.   The funding covers only 6 months, up to 25 hours per week at minimum wage, so unless pay is topped up by employers, the maximum earnings would be around £5,000 over 6 months (based on a rate of £8.20/h for 21-24 year olds). 
 
Also, how many of these new jobs will continue after the initial 6-month period? Will they provide temporary cheap labour for unscrupulous employers rather than proper training for young workers? We would have liked to see the government subsidise established graduate schemes – to keep them going and increase their intake – and persuade more companies to start new training programmes. As most graduate placements last at least a year, hopefully the economy might have picked up by then, young workers would feel genuinely motivated, and emerge with proper skills and experience to benefit industry.  
 
 That said, the provision of work experience is valuable in itself, as it undoubtedly improves employability and helps young people to determine their career direction. Whilst not perfect, this is a positive move, because placements have been increasingly hard to secure in the current climate with so many businesses struggling.
 
We had hoped for more financial help and support for startups and the self-employed. In this difficult jobs market, many young people are considering an entrepreneurial path, or pursuing enterprising side hustles.’
 

For help with jobhunting during lockdown and the aftermath of COVID 19, click here.

 

 

Housing

 Town house - yellow - wh bkgrd cropped
In an attempt to reinvigorate the housing market, the chancellor announced a stamp duty holiday with immediate effect until the end of March 2021: the threshold for stamp duty will increase from £125,000 to £500,000 in England and Northern Ireland. The change means that almost 9 out of 10 house purchases will be tax-free. And on property above the threshold, homebuyers will save £15,000 on stamp duty.
 
HelloGrads comment: ‘Great news for anyone buying or selling a home!’

 

 

What is stamp duty?

Stamp duty land tax is a lump-sum tax paid when you purchase a property or land, costing above a set amount, in England or Northern Ireland. (Scotland and Wales have their own systems). The tax rate depends on the price and type of property, where it is in the UK, and whether you’re a first time buyer.

 

 

 

Hospitality & Tourism

 Relax & unwind
The hospitality and tourism sectors, which employ over 2 million people, have pretty much ground to a halt during the pandemic. The government support measures aim to boost consumer spending with a VAT cut from 20% to 5% on food, accommodation and attractions, lasting until mid-January 2021.
 
There will also be an ‘eat out to help out discount’ to tempt people back into pubs, restaurants and cafés (Mondays – Wednesdays throughout August, 50% off up to £10 per head at participating businesses.)
Note neither the VAT cut nor the discount scheme applies to alcoholic drinks.
 
HelloGrads comment: ‘The discount is certainly a novel idea, we just hope it’s effective and not just a gimmick! Much will depend on the public’s appetite for eating out again.’

 

 

The Arts

 Financial Support - wh bkgrd-cropped
The chancellor has pledged a £1.6bn rescue package of loans and grants for the arts, culture and heritage sector, providing emergency support to help protect theatres, galleries and museums, after industry leaders warned that many venues were on the brink of collapse. It aims to preserve the ‘crown jewels’ of the arts sector as well as many local amenities including heritage sites, independent cinemas and music venues.
The government is also expected to soon announce a phased return of the performing arts.

 

 

The Environment

 
Continued green investment to protect the environment sees £3bn allocated to decarbonising (i.e. reducing greenhouse gas emissions). Measures include vouchers for energy-saving home improvements and making public buildings more energy efficient.
 

 
Sources:
BBC News: Summer Statement: Key points at a glance
The Guardian: Summer statement 2020: the chancellor’s key points at a glance
BBC News: Coronavirus: Emergency money for culture ‘won’t save every job’
 Homes & Property: Rishi Sunak confirms stamp duty ‘holiday’ on homes up to £500,000
 
 

Featured