Chancellor’s Statement (8 July 2020) – key points

The protection and creation of jobs and re-booting the hospitality and tourism industry were at the heart of Chancellor Rishi Sunak’s summer economic statement.

Here are some of the key points from his Commons speech as he spelled out the next stage of the government’s response to the economic impact of Covid-19:

Stamp Duty Holiday

The Chancellor announced a temporary holiday, effective immediately on stamp duty on the first £500,000 of all property sales, which will run until March 31 next year. It amounts to a large increase on the current threshold which is £125,000.

Job Retention

Chancellor Rishi Sunak has announced a new bonus scheme for firms that re-employ furloughed workers.

He told the Commons that any employer who brings someone back off furlough, and keeps them in a job until January, will get a £1,000 bonus per person from the government.
To get the new ‘Job Retention Bonus’ of £1,000 per person, firms must pay workers at least £520 each month.

If everyone on furlough were to benefit, the new scheme could cost the government £9bn, he said.

The Chancellor had earlier told the Commons that furlough could not and should not go on forever, though he said ending it would be “a difficult moment”.

He said he would “never accept unemployment as an inevitable outcome” to a 25 per cent decline in national income in two months. The job of protecting employment had only just started.

Tourism and Hospitality

The Chancellor announced initiatives aimed at getting people spending more in the hospitality and tourism sector – which have been massively hit by the impact of the coronavirus pandemic.

A temporary VAT cut for food and non-alcoholic drinks – from July 15 to January 12, 2021, aims to support businesses and jobs in the hospitality sector.

The reduced five per cent rate of VAT will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK.

There will also be a temporary VAT cut for accommodation and attractions over the same period to support businesses and jobs.
Here the reduced five per rate of VAT will apply to supplies of accommodation and admission to attractions across the UK.

Further guidance on the scope of this relief will be published by HMRC in the coming days.

In another move to encourage more people to use the hospitality sector, the government unveiled a “Eat Out to Help Out” discount scheme.

The scheme will give everyone 50 per cent off meals, during Monday to Wednesday, in participating cafes and restaurants during August.

There will be a maximum discount of £10 per person including children. A website will be launched on Monday so businesses will be able to register themselves on to the scheme.

Kickstart Scheme

The Chancellor also announced a new ‘Kickstart Scheme”. Under it, the government will subsidise six-month work placements for people on Universal Credit aged between 16 and 24, who are at risk of long-term unemployment.

It will amount to a grant worth around £6,500 per young person. The Chancellor told the Commons £2bn is being made available now and there will be no cap on the number of places funded.

He said: “The Kickstart Scheme will directly pay employers to create new jobs for any 16 to 24-year-old at risk of long-term unemployment.

“These will be decent jobs – with a minimum of 25 hours per week paid at least the National Minimum Wage.

“I urge every employer big or small to hire as many kickstarters as possible.”

Apprenticeships and training

Mr Sunak also announced more funding for careers advisors, and more traineeships. The government will pay employers £1,000 to take on trainees.

There will be a new £2,000 payment for businesses to encourage them take on apprentices. And £1,500 will be given for apprentices over the age of 25.

Creating greener homes

Other announcements in the summer economic update include £2bn to be spent on a new green homes grant.

The aim is to help make homes more energy efficient. The government will subsidise home improvements to this end.

That includes contributing to the cost of double glazing and fitting cavity wall insulation. Homeowners will be expected to pay a percentage of the cost with the government picking up the tab for the remainder.

Lower income households are expected to receive a bigger contribution to insulating their homes.

From September families will receive vouchers of up to £5,000 for energy-saving changes with the poorest getting up to £10,000.

The aim is to create tens of thousands of new jobs while helping the UK meet its 2050 target of achieving net zero carbon emissions.

• Further details of the initiatives announced by the Chancellor will be made available by the Treasury in the coming days.