Summer Economic Update – Sunak’s meaningful plan - Never a question of economics but of values

8th July 2020

Chancellor Rishi Sunak has delivered an economic update to the House of Commons. The Treasury has played down this being a ‘July Budget' or a ‘mini-Budget'. Instead it is very much a continuation of the Chancellor’s focus on introducing economic measures to offset the impact of Covid-19 in a package worth up to £30billion.

Hospitality and Tourism – VAT cut and “Eat out to help out” vouchers
Recognising that social distancing requirements have impacted the consumption-driven UK economy "more than others", the Chancellor has temporarily cut the standard rate of VAT, until January, from 20% to 5% on food, accommodation, and attractions. This reduction is to persuade consumers to spend cash they saved in lockdown.  In addition, he is introducing “Eat out to help out” vouchers that will give diners 50% off their meals out, with conditions, for August.

Employment - 'Job retention bonus'
With the overriding aim of stopping a massive increase in unemployment in the coming months, Rishi Sunak has unveiled a plan to keep furloughed workers in their jobs when the scheme ends in October. If employers keep workers in their jobs until January 2021 they will get a £1,000-per-worker jobs retention bonus to "reward and incentivise" companies keeping staff on

'Kickstart jobs scheme' for young people
To avoid mass youth unemployment, Sunak is seeking to triple the number of traineeships on offer to young people by, for the first time ever, the state paying the wages of young people on work placements for six months. “I urge every employer to hire as many kickstarters as possible,” he said. “There will be no cap on the number of places available.” Companies that take on apprentices will receive a £2,000 bonus.

Stamp Duty holiday
To stimulate the housing market, the Chancellor has announced a temporary change to stamp duty. Effective from midnight last night, and available until 31 March 2021, the property tax threshold at which stamp duty kicks in, has been increased from £125,000 to £500,000.

Green Homes
A £2bn "green homes grant" to help make homes more energy efficient is also unveiled. From September, homeowners and landlords will be able to apply for vouchers to make homes more energy efficient, with the prospect of creating140,000 jobs.