Rishi Sunak today announced his Summer statement, which is being referred to by commentators as a ‘Mini Budget’ and phase 2 of Boris’s ‘New Deal’. He himself referred to it as a ‘Plan for Jobs”.
Speaking in Parliament Sunak was at pains to stress his plan was not ‘encumbered by dogma’ signalling the governments continued commitment to interventionist politics which run contrary to the past 50 years of Conservative deference to free market economics.
11 Million people’s jobs have been protected, Sunak reiterated, cataloguing the various measures which had been implemented throughout the crisis period. “In total we have now provided 49Billion Pounds, since this crisis began” He told MPs, and claimed that the least well off had been supported the most. Perhaps wary of a surging SNP, he stressed the importance of working together as a strong United Kingdom.
Sunak levelled with the Commons that the economy contracted by 25%, the same amount it grew in the previous 18 years. Significant job losses are being predicted by the Bank of England. However, he assured the House he would not consider unemployment an unavoidable outcome, and promised that the work to protect jobs had only just begun. Many of the long-term issues would be addressed in the Autumn statement, he said “Our plan for jobs will not be the last action, but merely the next” he told MPs.
Sunak described furlough as a lifeline, but insisted it neither cannot nor should not continue indefinitely. He acknowledged the difficulty of ending it, though chided critics who he said would inevitably criticise any end date of the furlough; “If I end it in November, critics will say it should be ended in December”. He raised concerns about furlough, such as the lack of training an experience those on furlough will suffer, and confirmed furlough will wind down in October.
To incentivise employers to bring employees on furlough back to work, they will be paid a £1000 bonus per employee by the government. The employee must be paid an average of £520 per month from November to January for the employer to qualify. The plan will extend to every single employee on furlough, which is quantified at a total cost of some £9 Billion if every employer were to be in receipt of the bonus.
In addition, Sunak set out a 3-point plan for jobs. 1. To find jobs, 2. To create them and 3. To protect them.
In dealing with the first, Sunak looked to deal with the problems facing those looking for work, and in particular young people. To deal with this he announced a new ‘Kickstart scheme’ which would directly pay employers to create jobs for 16-24-year olds who were at risk of long-term unemployment. The jobs must have 25 hours per week and involve training and support for employers to find a permanent job. In return the government will pay that employees wages for 6 months. An additional £2billion is being made available, and no cap set in place to create hundreds of thousands of jobs.
The government will pay employers £1000 to take on trainees, particularly in sectors like engineering, construction and social care. £100 million is being created to fund additional training, and careers advice facilities will be expanded to help an addition quarter of a million people. Furthermore, on Apprenticeships, Sunak announced for the next 6 months the government would pay employers to create new apprenticeships, promising to pay some £2000 per apprentice.
To help people find jobs, Sunak promised to double the number of ‘work coaches’ in Job Centres, and said it would be amongst one of the most effective things the government could do, and promised an additional £1Billion to the DWP to help people back into work.
In dealing with his second point, job creation, Sunak reiterated his already announced capital funding, and the PM’s announcement of some £5Billion of accelerated spending, and told the House he would double down on these announcements, particularly by creating ‘Green Jobs’.
A new £2Billion Green Homes Grant was then announced, to give vouchers to home owners to make their homes more energy efficient, covering at least 66% of the cost, up to £5000. For poorer households, some £10000 would be made available, of which the government would cover the entire cost. This he said would create jobs, cut carbon, and help households save around £300 per year on bills. In total he described this as a ‘Green Jobs Plan’ worth £3Billion.
Sunak went on to stress the importance of house building to job creation, an industry which he said was worth £39 billion. To boost confidence, the Chancellor today announced a cut in stamp duty, increasing the threshold to £0.5Million, until March 2021. The changes he said, would take effect immediately, saving the average home buyer £4,5000.
The final part of the three-point plan was concerned with protecting existing jobs, particularly in hospitality and tourism. Pubs cafe's hotels and B&B’s are crucial to the British economy, Sunak explained. Yet 80% of hospitality firms have stopped trading temporarily due to COVID. The best way to get the sector thriving is to get them back up and running again, The Chancellor assured MPs, though he acknowledged there were concerns, he reassured the House it could, and would be done safely.
To boost this effort Sunak has cut VAT on eat in or takeaway food, accommodation, theme park attractions and more, from next Wednesday to 5%, from the existing level of 20%. This he said, would benefit 150,000 businesses and millions of employees and consumers. Not stopping there, Sunak promised every citizen in the UK through the month of August would get a government discount on take out food from participating businesses, up to a 50% saving of £10. “Eat out to Help out”.
This package clearly marks an unprecedented intervention in the British economy, and if the Chancellor is correct, marks the end of the beginning of intervention, rather than the beginning of the end. Will you benefit from this package? Do you think it's sufficient? Is there something you'd like to have seen that didn't get announced? Let us know