Updated: 21 August 2020
Though the last budget was only announced in March, in July, the Chancellor, Rishi Sunak, delivered his Summer Economic Update. As part of the government’s plans for economic recovery, he announced a host of new measures designed to stimulate the economy and help protect jobs in the aftermath of the lockdown. We broke down the most important updates to find out the impact these new plans will have on small businesses.
The main focus of the summer statement, the Chancellor announced the Government’s new three-point plan for jobs, which has been designed to give businesses “the confidence to retain and hire”. With a renewed focus on both creating jobs and providing support to help people back into employment, he announced a package of measures that encourage spending so businesses can better protect jobs.
Employers will be paid to create jobs for 16-24 year olds
In a bid to help young people get into employment, the Chancellor announced the Kickstart Scheme. Focused around the creation of jobs for 16-24 year olds who are currently claiming Universal Credit, and are at risk of long-term unemployment, the scheme will give employers 100% of the National Living Wage for 25 hours of work a week, per employee, for six months.
There will also be an additional amount paid to employers to cover any overheads, and there won’t be a cap on the number of places available, so businesses are encouraged to take on as many young people as they can.
Businesses will receive bonuses for new apprentices
In addition to the Kickstart Scheme, the Chancellor also announced bonuses for businesses that take on apprentices. Beginning in August 2020, employers will receive £2,000 from the Government for every apprentice that they hire under the age of 25, up until January 2021. For any apprentices hired who are over the age of 25, the Government will pay employers £1,500.
Employers will receive support for providing work experience
The Chancellor announced a renewed focus in traineeships, as the Government endeavours to triple the scale of traineeships in England in 2020-21. They also intend to triple the number of sector-based work academy placements, as well as doubling the number of work coaches. To entice businesses into hiring new trainees, the Government will pay employers in England £1,000 per trainee that they give work experience to.
New investment in construction projects
To increase the amount of jobs available, specifically in the building industry, the Chancellor also announced a £5.8 billion investment in new construction projects. These new projects will include:
The Government hopes that this new investment will create new work by “getting Britain building”.
Green Homes Grant Scheme could support tradespeople
While not directly targeted at businesses, the new Green Homes Grant Scheme will see homeowners and landlords in England being able to apply for vouchers worth up to £5,000. These vouchers can be redeemed to help pay for energy-saving improvements, such as insulation, lighting and double-glazing, and low-income households could get up to £10,000 for these upgrades.
This is fantastic news for construction businesses and tradespeople, as the initiative brings in new demand from homeowners and landlords using the scheme to implement these new green improvements.
Stamp Duty cuts to help support house building
Finally, to round off the plan to help create jobs, the Chancellor revealed the scrapping of Stamp Duty on homes of up to £500,000 in England and Northern Ireland, till 31st March 2021. While this doesn’t directly create jobs, the Government hopes that by cutting Stamp Duty, people will be encouraged to move or buy a new home over the next few months. This could, in turn, provide more demand for builders and other tradespeople, in terms of renovations and other building jobs.
The furlough scheme is becoming the Job Retention Bonus
One of the biggest pieces of news in the Summer Statement was the changes to the furlough scheme, which will now become the Job Retention Bonus. As the furlough scheme winds down and the economy starts to recover from the impact of the pandemic, the grant available to businesses for furloughing workers will gradually reduce each month from August, before ceasing completely on 31st October. In its place, the Job Retention Bonus comes into force, offering employers a £1,000 bonus for each furloughed employee that’s kept up until 31st January 2021.
VAT cuts to help support hospitality and tourism
As the hospitality and tourism sectors were among the hardest hit by the coronavirus pandemic, it’s no surprise that the Chancellor has chosen to focus on these areas to stimulate the economy. With that in mind, he announced reduced VAT on food, accommodation and attractions to 5%, down from its current 20%.
New scheme, “Eat out to help out” will support the UK’s food businesses
One of the more publicised schemes, the “Eat out to help out” initiative has seen the Government give everyone in the UK a discount to use on Mondays to Wednesday in August, when dining out. Restaurants, cafes and pubs are all able to offer half-price meals. The maximum discount is up to £10 per head for everyone, including children.
Businesses can register for the scheme here. The system of discounts involves businesses needing to claim back the money from the Government, and funds should be in your account within 5 working days.
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