Chancellor Rishi Sunak presented the Government’s plans to get businesses and workers back on track following the COVID-19 crisis earlier today in “A Plan for Jobs” speech. 

Setting the tone of the economic challenges ahead, he reminded us that the International Monetary Fund (IMF) is expecting the deepest global recession since records began, household consumption fell dramatically since lockdown, and businesses stopped trading and hiring. Taken together, the UK economy contracted by 25% over two months; the same amount as it grew in the previous 18 years.

The most significant issue we face is job losses, however the Job Retention furlough scheme cannot go on forever and the Chancellor confirmed that this will be withdrawn in October, as previously announced.

A summary of today’s announcements:

1. A new Job Retention Bonus to reward and incentivise employers who successfully bring furloughed staff back and employ them through to January 2021. A £1,000 bonus per employee will be paid for qualifying employees – those being paid at least £520 on average each month November to January.
2. A “Kickstart Scheme” for young people. Employers will be paid to create new jobs for 16 to 24-year olds who are at risk of long-term unemployment.  The jobs must provide at least 25 hours per week paying at least the national minimum wage. If employers meet the conditions, the Government will pay the young people’s wage for six months plus an amount to cover overheads. Employers can apply to join the scheme from next month, £2 billion funding is available and for a 24 year old, the grant available is equivalent of £6,500).
3. Trainees – employers will be paid £1,000 to take on new trainees from school leavers, there will be apprenticeship bonuses paid for the next six months if over 25s are taken on; also increased funding for DWP to boost resources and support provided at Job Centres. 
4. Investment in Infrastructure – we will have better roads, better schools and hospitals and high streets. A £2 billion Green Homes Grant will be available to create green jobs and from September vouchers can be applied for to make homes more energy efficient and create local jobs in so doing.
5. Cut Stamp Duty – note this will not apply in Scotland and we await any response and equivalent reduction in LBTT from the Scottish Government. The nil threshold will increase from £125,000 to £500,000 from today until 31 March 2021.
6. VAT on hospitality and tourism will be cut from 20% to 5% for six months from next Wednesday until 12th January 2021. This will apply to food, accommodation and attractions.
7. A first for the UK – for August 2020, everyone in the country will get an ‘Eat Out to Help Out’ discount. Meals eaten in participating businesses Monday to Wednesday will get 50% off, up to £10 per head, including children. Businesses will need to register on a website that will go live next Monday. Each week in August the funds can be claimed, and monies paid within 5 days. 

Overall verdict

Time will tell whether these measures have the desired impact. How brave will we all be to buy properties before we see where prices will bottom out?  Will we all rush back to restaurants in August? Probably if the weather is good, who says no to a free meal?  Will this be enough? 

How will this affect Scotland?

Tomorrow, we will hear more on the measures that will directly affect Scotland and which will result in more funds for the Scottish government to distribute as they choose. Our advisers will provide a full update on each of the measures once we have more information.

On first impressions however, it feels too narrow and short a timeframe to reverse the decline, so let’s hope he keeps topping up the incentives and doesn’t delay to take further action.