Last week the chancellor, Rishi Sunak made his summer statement on the UK’s economic recovery, following the Coronavirus (COVID-19) pandemic. He began by addressing that the initial emergency response he made in March, was phase 1, focusing on protecting the economy and the financial health of individuals and businesses. We are now in phase 2, with a much bigger focus on protecting jobs. The focal point of the announcement was on this one main goal, and the supporting documentation released by the Treasury was simply titled the government’s ‘Plan for jobs’
The furlough scheme was initially set out to keep people from losing their jobs. However, it cannot go on forever and will be slowly wound-down over the next few months, with it coming to an end in October 2020. A new policy has been created called the ‘Jobs Retention Policy’ which rewards employers that bring staff back from furlough. Employers would be paid a £1000 bonus for each employee they bring back. In order to qualify, employees must be employed until the end of January 2021 minimum and paid at least £520 per month from November 2020 to January 2021. The bonus is available for all furloughed employees and is a great initiative to prevent many redundancies. However, is this just delaying redundancies until Feb 2021?
Primark has announced that they will not take advantage of a £30 million bonus offered by the government for bringing back 30,000 staff from furlough. They believe that it is not necessary to take advantage of the taxpayer’s cash as they have already brought back most of their employees since the opening of their stores. Will this encourage other big brands to follow suit?
In addition, a new scheme has also been made to help young people. After leaving education, 700,000 young people will join the workforce this year. It is for this reason that the ‘Kickstart’ scheme was created, for those aged 16-24-year olds. The government will pay wages for new jobs, for the first 6 months. The funding will be for 25 hours per week at minimum wage and applications will be available from August 2020 to start in the autumn. This seems like another great opportunity so that young people are not left unemployed or is it another way to delay it until Spring 2021? On the other hand, this will be a great help for many businesses, especially those that employ many low paid workers such as the hospitality sector. Are you looking to take advantage of this scheme for your business?
The government is also investing in new traineeships for 16-24-year olds, where employers will receive £1000 bonus. For new apprenticeships they will receive £2,000 per apprentice under 25, £1,500 for 25yr+ apprentices and this will run from 1 August to 31 January 2021.
People will also be able to apply for the ‘Green Homes Grant’, up to £5,000 per household or £10,000 for lowest incomes. This will be directed at energy efficiency work in homes, such as double-glazing companies etc.
Stamp Duty Land Tax threshold was also lifted immediately from £125k to £500k. However, it is temporary until March 2021. This will open a window of opportunity to stimulate the economy.
Rishi Sunak also announced that VAT would be temporary slashed from 20% to 5% for hospitality and tourism businesses from the 15th July until 12th January 2021. This is a great initiative for this sector as they have been hit hard, with 80% of businesses closing in April.
As always, we do not know how the above will affect the economy, we can only but hope a positive outcome. However, we do understand that many businesses will need to change their operating model and adapt to change. At CMG we specialize in strategic change and business transformation and can help you on this new challenge you are about to embark on. Get in touch with the team today by emailing [email protected] .