Today, the Chancellor delivered a financial statement to parliament, updating on his plans to reboot the economy and rebuild in the wake of the COVID crisis
He described how the economy had contracted by more than 25% in just two months, the equivalent of the past 18 years of economic growth. With more than 9 million people furloughed under the Coronavirus Job Retention Scheme, and a further 2.7m supported by the Self Employment Support Scheme, the Chancellor set out his “Plan for Jobs” which will provide up to £30bn in additional stimulus to the economy as we enter “the second phase of [the government’s] economic response”, this builds on £160bn of pre-announced measures. Rishi Sunak also confirmed the third phase of the government’s plan, expected the be presented at the autumn budget, will focus on rebuilding.
The Chancellor then confirmed that the although the current furlough scheme cannot go on forever as it will “give people false hope” that their jobs will survive, he announced that the Government will launch the Job Retention Bonus Scheme, which will incentivise firms to re-employ furloughed workers, and will be worth up to £9 billion. He also confirmed the launch of the new £2 billion Kickstart Scheme to create new, fully subsidised jobs for young people, and announced that a total of £1.6 billion will be invested in scaling up employment support schemes, training and apprenticeships to help people looking for a job. A full summary of relevant announcements can be found below.
The Chancellor concluded by noting that the Government's response was a question of "values" not just economics, and noted that "it is an unambiguous choice to make this moment meaningful for our country in a way that transcends the frustration and loss of recent months. It is a plan to turn our national recovery into millions of stories of personal renewal.”
PPA commented: “These measures are a welcome intervention and will provide much needed support for employers and employees across the publishing industry. With revenues under sustained pressure as the fallout from COVID-19 continues to impact newsstand sales, advertising and live events, the road to recovery will be long but with the right balance of support we can continue to entertain, inform, educate and inspire our audiences.
“Consumer magazine and business media brands can play their part in helping the economic recovery by rousing business and consumer confidence. PPA has called for targeted government advertising and public health messaging to guide our audiences back to business as consumers return to hobbies, passions and interests in COVID-secure environments. We continue to advocate on behalf of our members for additional measures as publishers adapt and rebuild from this downturn. We urge the government to continue working with us to provide both fiscal and non-fiscal measures to accelerate the recovery, including business rate relief, support for events and exhibitions, and a tax credit for advertising.”
o The Chancellor confirmed that the Government’s Coronavirus Job Retention Scheme will end in October 2020.
o A Job Retention Bonus will be introduced to help firms keep furloughed workers. UK Employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021. In order to receive the bonus, firms must pay employees at least £520 each month. Full details to be published in July.
o A new £2 billion Kickstart Scheme will be launched to create new, fully subsidised jobs for young people across the country. Those aged 16-24, claiming Universal Credit and at risk of long-term unemployment, will be eligible. Funding available for each six-month job placement will cover 100% of the National Minimum Wage for 25 hours a week – and employers will be able to top this wage up. The scheme will open for applications in August, with the first jobs expected to start in the autumn, and run until December 2021 - with the option of being extended. There will be no cap on the number of jobs available.
o A total of £1.6 billion will be invested in scaling up employment support schemes, training and apprenticeships to help people looking for a job, through the following schemes:
Businesses will be given £2,000 for each new apprentice they hire under the age of 25, or £1,500 for those over 25. This is in addition to the existing £1,000 payment the Government already provides for new 16-18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan. This is available from August 1 2020 – January 31 2021;
A £111 million investment to triple the scale of traineeships in 2020-21 ensuring more young people have access to high quality training;
Nearly £900 million to double the number of work coaches to 27,000;
An extra £32 million investment in the National Careers Service.
Other headline policies announced today include:
o VAT will be cut from 20% to 5% for the hospitality and tourism sectors from 15th July 2020 until 12th January 2021.
o A new "An Eat Out To Help Out” discount scheme will provide a 50% reduction for sit-down meals in cafes, restaurants and pubs across the UK from Monday to Wednesday every week throughout August 2020, with a maximum discount of £10 per head. Businesses can register and claim the money back each week in August, with funds in their bank account within five working days.
o a temporary holiday on stamp duty on the first £500,000 of all property sales in England and Northern Ireland, to run until 31st March 2021. The change will take place immediately.
o from September 2020, homeowners and landlords in England will be able to apply for vouchers from a new £2 billion Green Homes Grant scheme to pay for green improvements such as loft, wall and floor insulation. The grant will cover at least two thirds of the cost, up to £5,000 per household, and low income households will receive vouchers covering the full cost - up to £10,000.
While the statement did not address the detailed impact of these measure on the public finances, or future tax measures, the Treasury document confirmed “the government is committed to fiscal sustainability and ensuring the long-term health of the public finances. The government will set out further details on its plans for a sustainable and balanced medium-term fiscal policy at the next Budget alongside an updated OBR forecast.”
The next Budget and a Spending Review will take place in autumn 2020.