On July 8th, the Chancellor Rishi Sunak unveiled his summer economic plan to help the UK economy recover from the impact of the coronavirus pandemic by allocating £30bn.
In order to protect, support and create jobs, the government has announced new policy measures. To begin with, the Chancellor confirmed the furlough scheme will end in October, stating that leaving the furlough scheme open any longer would give people false hope that it would be possible to return to the jobs they had before. The government introduced a new Job Retention Bonus to reward and incentivise employers who are going to keep employees who were previously furloughed. In particular, this new policy consists of a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed until the end of January 2021. Employees, on average, must earn above the Lower Earnings Limit (£520 per month) between the end of the Coronavirus Job Retention Scheme and the end of January 2021. Employers will be able to claim the bonus from February 2021 once accurate RTI data to January 31st (real time submission of information to HMRC) has been received.
Furthermore, in order to encourage people to return eating out, the government, thanks to the “Eat Out to Help Out” measure, will entitle every diner to a 50% discount up to £10 per head on their meal at any participating restaurant, café, pub or other eligible food service establishment. This measure will be valid for the entire month of August. The discount can be used unlimited times and will be valid Monday to Wednesday on any eat-in meal (including non-alcoholic drinks) across the UK. Businesses will be fully reimbursed for the 50% discount.
Moreover, from July 15th 2020 to January 12th 2021, with the aim of supporting businesses and jobs in the hospitality sector, the UK government will temporarily cut VAT from 20% to 5% for food and non-alcoholic drinks. The reduction will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, café, all holiday accommodation in hotels, B&Bs, campsites and caravan sites, as well as attractions like cinemas, theme parks and zoos. The Treasury said it hoped firms would pass the VAT savings on to customers, but many had been without income for months so it would be their decision.
The government will also introduce a new Kickstart Scheme in Great Britain, a £2bn fund to create 6-month work placements aimed at those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment.
A temporary stamp duty Land Tax cut, to ensure medium-term confidence in the property market, was another measure unveiled by the chancellor. The government will temporarily increase the exemption band of Residential stamp duty Land Tax, from £125,000 to £500,000. This will apply from 8 July 2020 to 31 March 2021.
Here are other policy measures which have been announced:
- Vouchers up to £5,000 for energy-saving home improvements as part of a wider £3bn plan to cut emissions.
- A £1.6bn package for the arts and heritage sector.
- The doubling of front-line staff at job centres, as well as an extra £32m for recruiting extra career advisers and £17m for work academies in England.