Like many of you I have just come away from watching the Chancellor’s statement and I am pleased to see that the government is not leaving businesses and employees to fend for themselves now the initial lockdown has ended. The sums of money being offered are again eye-watering, but it remains to be seen whether they have the effect of kick starting the economy as intended. I certainly hope so!
The detail of these measures will start to come out over the next day or so, but here is a brief summary of the main measures:
- £1,000 bonus paid per employee paid to employers for all staff taken back from furlough who are still employed ‘through to January’. The intention of this is to take away the cliff edge from the end of the furlough scheme. It is a novel idea and one which had not been widely anticipated. Given the potential £9 billion cost of paying £1,000 per furloughed employee, let’s hope that the effect is not simply to defer the cliff edge until January when employers will also be facing their tax bills.
- A scheme to help people to find jobs, support jobs and create jobs. Amongst the measures announced in the ‘Kick Start Scheme’ the government will:
- Pay the wages for 6 months of 16-24 year olds at risk of long-term unemployment. The Chancellor says ‘these will be decent jobs, with a minimum of 25 hours per week paid at least the national minimum wage’. The cost to the Government would be £6,500 per young person
- Pay £2,000 to companies to encourage them to hire apprentices (or £1,500 for apprentices over 25)
- Pay £1,000 to businesses taking on trainees
- Designate £100 million to create places for 18 and 19 year olds on Level 2 and Level 3 courses
- Provide £250,000 towards helping careers advice
- The Chancellor also announced a cut in VAT from 20% to 5% on food, accommodation and attractions until 12 January 2021 as well as giving us all 50% off meals if we eat out (up to £10 a head) during August.
- There is also a stamp duty cut for new purchases up to £500,000. This could save £15,000 on a new purchase. Locally we are fortunate that our property market seems to have recovered well, but clearly that is not a national picture. The only concern with this measure is that it is effective only until 31 March 2021, and historically when these types of measures occur, the following 3-6 months after the end of the relief tend to be very quiet for transactions.
Again, Chancellor Rishi Sunak has been able to play Santa Claus with these giveaways. I really do hope that they are what is necessary to bring the economy back up to speed because at some point he is going to have to put on a very different hat to pay for these measures.