The Chancellor of the Exchequer has announced his package of measures to support jobs.
It includes a Job Retention Bonus to help firms keep furloughed workers. Employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed at the end of January 2021.
A new £2 billion Kickstart Scheme will be launched to create hundreds of thousands of new, fully subsidised jobs for young people. 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 per cent of the National Minimum Wage for 25 hours a week – and employers will be able to top this wage up.
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.
Richard Rose, partner and head of BDO LLP in the Midlands, said: “The Chancellor has placed a firm focus on jobs and creating employment opportunities for young people. The “Kickstart” placement scheme is an interesting way to re-think entry level roles by subsidising work placements for those who are 16-24 in a very challenging jobs market. Individuals will receive around £5,500 from the government over six months and businesses are set to get £1,000 for each placement. When we asked business leaders “what should be the top priority Government spending until 2025?”, 71 per cent agreed that boosting businesses and jobs was where the emphasis should be placed.
“Somewhat conversely, only four per cent felt education and training should be prioritised. This suggests that for a work placement scheme and traineeships to be truly effective, businesses will need practical support as well as funding to get the buy-in which will bring its intended benefits to life. It can’t be underestimated the pressure business owners have been under in recent months to protect jobs and their future.
“Many mid-sized businesses are already stretched. Running quality placements and traineeships which add real value is time and resource intensive and the Chancellor is asking businesses to take on as many kickstarters as possible. That said, with the right government support, strengthened links with education and effective regional and cross-sector collaboration, this scheme could be a much-needed intervention for the next generation of employees and the businesses which have the potential to create future jobs.”
Matt Griffith, Director of Policy at Business West, said: “For someone who has only been Chancellor for 5 months, Rishi Sunak is proving a remarkable calm and capable operator. This is lucky, because never have these qualities been more important.
“This is a critical moment. The withdrawal of furlough payments, amidst deep economic uncertainty and the continuation of social distancing, is a major risk: the UK could see an unprecedented collapse in employment that would do long lasting damage to our economy.
“For this reason, Rishi Sunak’s overwhelming focus was on jobs – on their protection and creation.
“And it was an impressive array of measures, from a jobs retention bonus to a £2bn kickstart fund for new jobs for young people, to a wider economic stimulus via stamp duty cuts and a 5% VAT rate for leisure and hospitality businesses.
“He also pulled a rabbit out of the hat with a voucher to get people back eating at restaurants.
“This economic statement, however, remains a gamble. Are firms confident enough to retain and create enough jobs in the face of such uncertainty? Will the measures be enough to counterbalance the hit to income and capacity that social distancing has given to our hospitality and food & drink industries? Will we see a second spike and local lockdowns to blow events off course?
“The Chancellor has an Autumn budget as fallback in case this statement isn’t enough. But in the meantime, let’s take up his generous offer to help our economy recover – if the Chancellor is buying, it is up to us to help support getting our local economy back on track.”
Amanda Dorel, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “The Chancellor has provided vital lifelines to young workers with the new Kickstart scheme and through the incentives encouraging firms to take on apprentices. We have long recognised the important role of apprenticeships in the West Midland’s thriving manufacturing sector and will continue to do our bit by supporting the upskilling of graduates and apprentices as part of our partnership with the Manufacturing Technology Centre in Coventry.
“The measures introduced today will support an economic recovery that we’re beginning to see very early signs of in the region. The West Midlands registered the most confident reading of all UK regions in last month’s Lloyds Bank Business Barometer, and data pointed to an accelerated pace of business reopenings.
“While Government support packages are crucial to recovery, so too will be careful planning and working capital management by business leaders. We remain committed to helping this region’s resilient business community build back better in the months ahead.”
The measures announced in the summer statement today to help young people are a step in the right direction, according to Dr Joe Marshall, Chief Executive of the National Centre for Universities and Business (NCUB). He said: “The Kickstart scheme is a welcome step to keep youth unemployment down. It is vital to avoid lasting damage to careers that are just beginning. Skilled graduates in particular are the pipeline of future talent that businesses need, and they will undoubtedly play a crucial part in our economic recovery post Covid.”
Chris Luty, chief executive officer of West Midlands-based training company BCTG Group, said the Chancellor’s announcements were very positive but they needed to be aligned for maximum impact.
“The Kickstarter Scheme and the focus on traineeships are very encouraging but we need to ensure that young workers can progress from traineeships into apprenticeships so that at the end of six months they are fully employed and not simply back to square one.”
Rishi Sunak said: “We believe in the nobility of work. We believe in the inspiring power of opportunity. We believe in the British people’s fortitude and endurance.
“Our plan has a clear goal: to protect, support and create jobs.”
- Businesses will be given £2,000 for each new apprentice they hire under the age of 25.
- A £111 million investment to triple the scale of traineeships in 2020-21 ensuring more young people have access to high quality training.
- £17 million of funding to triple the number of sector-based work academy placements in 2020-21
- Nearly £900 million to double the number of work coaches to 27,000;
- Over a quarter of a million more young people to benefit from an extra £32 million investment in the National Careers Service.
He said that the plan will also create tens of thousands of jobs through bringing forward work on £8.8 billion of new infrastructure, decarbonisation and maintenance projects.
This includes a £3 billion green investment package.
As part of this package homeowners and landlords in England will be able to apply for vouchers from a £2 billion Green Homes Grant scheme this year to pay for green improvements such as loft, wall and floor insulation.
Rishi Sunak acknowledged the issues faced by the tourism and hospitality sectors. 80 per cent of hospitality firms stopped trading in April and 1.4 million hospitality workers have been furloughed – the highest proportions of any sector.
To encourage these businesses in their recovery and give them the confidence to rehire, he announced a new “Eat Out to Help Out” discount scheme which will provide a 50 per cent reduction for sit-down meals in cafes, restaurants and pubs across the UK from Monday to Wednesday every week throughout August 2020.
The rate of VAT applied on most tourism and hospitality-related activities will also be cut from 20 per cent to five per cent.
Jane Pendlebury, the CEO of HOSPA, the Hospitality Professionals Association, said: “The reduction in VAT is absolutely massive news for the hospitality industry. It’s not often that I can say I’ve felt a rush of emotion following a House of Commons announcement, but today I certainly have – and that’s something that just serves to underline how much of a huge relief the latest measures are.”
Her opinion was echoed by UK Hospitality, the leading hospitality trade association, which tweeted: “This is excellent news and shows Government is listening to the needs of hospitality and how with the right support we can play our part to support economic growth and national wellbeing and help the UK recover.”
Helen Peters, Chief Executive for Shakespeare’s England, the Destination Management Organisation for South Warwickshire, said the announcement made by the Chancellor of the Exchequer about the voucher scheme and a VAT reduction would provide further peace of mind to hospitality and tourism businesses.
“The past three months have proven to be desperate times for the hospitality and tourism sectors,” she said.
“Some have opened their doors once again but trade will not suddenly return to pre-Covid-19 levels, while others are still closed as they try to navigate this pandemic.
“So we still have a long way to go to make sure that businesses are back on track, but the measures that have been announced by the Chancellor of the Exchequer are another positive step forward to aid them to get back on their feet again.”
It was also good news that the Government has come up with additional ways to help encourage people to visit restaurants, cafes and pubs especially during the quieter weekday periods, she added.
“This is exactly the kind of support that they need at the moment and working along side the industries We’re Good to Go, accreditation mark and Shakespeare’s England’s #discoveryourdoorstep campaign, will help boost confidence amongst the public and drive guests back into our hospitality businesses.
“This has been a devastating time for local hospitality and tourism businesses, but now is the time to support them.”
The Chancellor has also introduced a temporary increase to the Nil Rate Band of Residential SDLT (Stamp Duty) from £125,000 to £500,000 until 31 March 2021.
Reacting to this,Sarah Gardener, Partner and Head of Real Estate & Construction for Oxfordshire Accountants, Shaw Gibbs, said: “The reprieve for this tax on a large proportion of housing-stock in the UK will help keep the housing market moving and will bolster the confidence of those that are concerned about the impact that Coronavirus will continue to have on their financial wellbeing. It is estimated that almost one in 10 sales will now be immediately Stamp Duty free. This has already had a positive effect on the stock market, with developers such as Taylor Wimpey seeing an increase in share price.
“Any change in the economy provides opportunity in the property market as there is movement. Despite the huge shock the sector has suffered as a result of the suspension of trading during the COVID-19 lockdown, these early weeks indicate that the residential property market is making a steady recovery. There is a quiet optimism amongst those in the profession and this announcement should only help to sustain the recovery further.”
Rishi Sunak said: “We want people to feel confident to move, to buy, to sell, to renovate, and to improve their homes.”