It’s no secret that coronavirus has been damaging to the economy and many have suffered and will continue to suffer as a result. Pressure has been mounting on the government to increase their economic response. They delivered in a Summer Statement or mini budget on 8th July.
As we move into phase two of the recovery plan (phase one was lockdown), Chancellor Rishi Sunak has announced a £30 billion plan. This is a bid to prevent mass unemployment and boost the economy.
It has been made clear that 16-24 year olds have in many ways been hardest hit economically by the pandemic. Therefore, many of the measures have been designed specifically with young people in mind and to help keep us all in work.
Here is an overview of the key announcements from the Summer Statement and what they mean in reality for you.
Eat out to help out
The most headline grabbing announcement was the Eat Out to Help Out scheme. Throughout August, from Monday to Wednesday diners at participating restaurants will receive 50 percent off their meal. This is up to a maximum of £10 a head.
This led to Martin Lewis of Money Saving Expert fame describing Rishi Sunak as the “BOGOF Chancellor.”
In addition, VAT on the hospitality and tourism industry being slashed from 20 to 5 percent. This applies to (but is not limited to) restaurants, bars, hotels, B&Bs, campsites and tourist attractions. It should lower prices significantly, even without benefiting from 50 percent off. This will last until January 12th.
As a result, your summer socialising (and indeed Christmas!) should cost you significantly less than it otherwise would.
Job Retention scheme
The furlough scheme will definitely end in October. The Chancellor said it would be irresponsible and in “no one’s long term interest” to keep extending it. Effectively, the longer people haven’t been working for, the more likely they are to become rusty. They will then find it harder to get a new opportunity.
Despite refusing to extend the scheme, he was adamant he would “never accept unemployment as an inevitable outcome.” In this vein, he has created an incentive scheme for employers to bring back furloughed staff.
For every employee bought back who stays in work until January, the government will pay a £1,000 bonus. There’s no cap on this scheme. If every furloughed employer is bought back, the government will pay £9.4 billion.
However, the Chancellor warned employees must be properly bought back. They must be paid an average of at least £525 a month to be eligible for the bonus. “It’s vital people aren’t just returning for the sake of it – they need to be doing decent work,” he warned.
£1,000 per employee is a significant sum for most firms. Hopefully, it should encourage those currently sitting on the fence to bring back their staff and could save a lot of jobs. As 16-24 year-olds are the age group most likely to have been furloughed, this scheme should benefit them the most.
This scheme is designed to support 16-24 year olds who are at risk of long term unemployment. It’s a scary time for those just entering the workplace as jobs are few and far between. Additionally, many companies are reluctant to take a chance on complete beginners. However, this scheme should encourage employers to do just that.
For each ‘kickstarter’ job, the government will cover the cost of 25 hours’ work a week at minimum wage for their first six months. Minimum wage is currently £4.55 for under 18s, £6.45 for 18 to 20-year-olds, and £8.20 for 21 to 24-year-olds. Employers will be able to top up the payment if they choose.
The government said this will give young people “the opportunity to build their skills in the workplace, and to gain experience that will improve their chances of going on to find long-term sustainable work”.
The scheme will open for applications in August, with the first jobs expected to start this autumn, and run until December 2021. Currently £2 billion has been set aside for this. But, there is no cap on the number of kickstarter jobs that could be created.
Other incentives to get young people and the long-term unemployed into work include: £1,000 grants to firms taking on new trainees, increased funding for careers advice, more support for the apprenticeship scheme (some of which will be directly targeted at over 25s), and an increase in the number of job centre support staff.
For apprentices, firms will be able to apply for a £2,000 grant for each they take on, as well as an additional £1,500 for those over 25.
In short, this should be encouraging if you are trying to find a job. Businesses are being encouraged to take a change on staff, particularly young people, so hopefully many will benefit from this.
For those of you who have read some of my other posts, you will know this was music to my ears.
The government is not only focused on getting the economy moving as quickly as possible but is actively trying to make it greener and more sustainable. As part of this, the Chancellor announced a £3 billion plan to cut emissions.
This includes vouchers of up to £5,000 for energy-saving home improvements. This will also create local jobs within the construction industry. £1 billion has also been pledged to make improvements to public buildings.
Arguably the least relevant to younger people right now, is the change to Stamp Duty Land Tax (SDLT). However, this will be very beneficial if you are buying a house.
The threshold at which you start paying has increased from £125,000 to £500,000. This means roughly 90 percent of home buyers will pay no stamp duty at all, saving significant money.
Even in London, where the average home price is £540,000 (I know – that’s a serious sum!), buyers will benefit. Stamp duty on a property of this value will now be just £2,000, as opposed to £17,000.
For those in the process of buying a house, or thinking about doing so soon, this will reduce the costs. It may even mean they can afford some of the so-called ‘green schemes’ on offer – a double win.
Looking ahead, tax rises may be on the cards and inevitably jobs will be lost. This will certainly be a balancing act for the government once phase 3 (rebuilding) starts and the true state of the economy is revealed.
However, for now this seems like a comprehensive and set of measures that should boost the economy and hopefully protect and create many jobs.
Now eating out is considered supporting the economy and the government is subsidising you to do so, Enjoy an extra bit of indulgence if you feel able to do so and can maintain social distancing!
This is by no means a full list of all the policy changes and announcements, but aims to give you an idea of the main changes that will impact you.
If you found this post interesting or useful, please like it and share across social media or send it to your friends. I’d also love to hear your thoughts and experiences, so please do leave a comment! Do you think you’ll benefit from any of these schemes?