Against the backdrop of the support schemes designed to shield the economy from the fall out of coronavirus, this week saw Chancellor Rishi Sunak deliver his summer economic statement. The statement outlined phase two of the UK’s economic recovery, with the focus firmly on jobs. A third phase will later centre on ‘rebuilding’.
With jobs in mind, Sunak confirmed the end of the furlough scheme in October. He noted that while this would provoke criticism from some quarters, the best way to preserve jobs was to get people back to work. He argued that the longer people were out of work, the harder it was to maintain skills, while keeping people in jobs that were merely propped up by a government support scheme would give them false hope.
Turning his focus to the workplace, Sunak announced a three point plan, starting with a bonus scheme for firms that re-employ furloughed workers worth up to £9bn. Any employer who brings someone back off furlough, and keeps them in a job until January, will get a £1,000 bonus. In order to qualify, firms must pay employees at least £520 each month.
The Chancellor’s second point outlined a ‘Kickstart Scheme’ that will see the government pay employers to create jobs for young people aged 16-24. Sunak said that this demographic were particularly hard hit by the pandemic, with job cuts affecting graduates and sectors that traditionally employ younger people. The government will pay young people’s wages for up to six months under the scheme, which will amount to a grant worth around £6,500 per young person. Sunak encouraged organisations to take on ‘as many kick-starters as possible,’ saying there will be no cap on the number of funded places.
The third point addressed increased funding for careers advisers, and more traineeships/apprenticeships. Claiming that apprenticeship are a proven route to permanent employment, the Chancellor said there would be a new £2,000 payment for firms to take on apprentices. In addition to this, Sunak said that the number of work coaches in job centres is being doubled to help support people into work.
Also supporting the creation of more jobs is the creation of a £2bn ‘green homes grant,’ which should make 650,000 homes more energy efficient while saving families £300 a year. On top of this, there will be £1bn of funding to improve the energy efficiency of public buildings. This will add another three billion jobs to the construction sector, which already contributes £39bn per year to the UK economy and supports 750,000 jobs.
Staying with house building, Sunak said that uncertainty in the market had caused property transactions to fall by 50% in March. In order to encourage confidence in the property sector, Sunak announced that stamp duty would be abolished on homes worth up to £500,000 until next March. This will see the average stamp duty bill fall by £4,500. The cut will take effect immediately, and will last until 31 March 2021.
Lastly, the Chancellor turned his attention to jobs in the worst hit sectors – tourism and hospitality. 80% of hospitality firms stopped trading in April, with many people still cautious about going out. However, Sunak said that if people are careful, they can all enjoy the summer safely. In order to help restart these sectors, Sunak announced a VAT cut on tourism and hospitality from 20% to 5% until January. In addition, the government will also create an “eat out to help out scheme”, offering customers a discount worth up to £10 per head when they eat out from Monday to Wednesday in August.
For a wider overview of the economic outlook you can read our article here, or check out the latest job roles on offer as hiring picks up speed this month. If you’re starting a contracting role, ContractingWISE has access to a wide range of hassle-free services that can help you with setting up a limited company or finding the right umbrella company for you. To talk to a member of our team, call: 0203 642 8679