Chancellor’s ‘A plan for jobs’

The Chancellor’s update today was, unsurprisingly, all about supporting, protecting and creating jobs.   The announcement of an “Eat Out to Help Out” discount in August to encourage people back into pubs, cafes and restaurants was the quirkiest part of today’s speech.  Elsewhere the focus was on stimulating certain sectors of the economy – construction, housing and the green sector in the main.

To support businesses coming out of the current Job Retention Scheme in October, a Job Retention Bonus will give employers a one-off payment of £1,000 for every furloughed employee who remains continuously employed to 31 January 2021.   There were also a raft of measures introduced to support jobs for young people and the unemployed with a new £2bn Kickstart Scheme aimed at creating high quality 6-month work placements for those aged 16-24 on Universal Credit and at risk of long-term unemployment and new payments of £2,000 to employers in England for each new apprentice they hire who is under 25.

The measures aimed at job protection were targeted at the hard-hit hospitality, accommodation and attractions sector with a temporary reduction in the VAT rate to 5% from next week until January 2021 alongside an “Eat Out to Help Out” scheme which will give everyone a 50% discount of up to £10 per head on meals at pubs, cafes and restaurants in August.  It will be interesting to see the detail of the VAT rate cut when further guidance is published to work out how widely drawn the scope will be.  And the administration of the Eat Out scheme could be tricky with businesses having to apply VAT on the discounted price and keep a record to claim the government refund.

The Chancellor hopes that job creation in the housing and construction sector will be boosted by a temporary cut in Stamp Duty Land Tax (SDLT) so that anyone buying a house for less than £500k between now and 31 March 2021 will pay no SDLT.  Also aimed at home owners, a new £2bn Green Homes Grant will fund energy efficient expenditure on homes, up to £5,000 per household and up to £10,000 for those on low incomes.

The full text of the Chancellor’s Plan for Jobs includes a summary of the government support announced since 11 March 2020 relating to Covid-19 and it demonstrates the fiscal investment that has been made – £158.7 billion of direct fiscal support (i.e. Job Retention Scheme, increases in Universal Credit), £50 billion of VAT and income tax self-assessment deferrals and £72.8 billion of loan support.  A staggering total of £281.5 billion which brings into sharp focus the mammoth task facing the Chancellor for the rest of the Government’s term, and more immediately in the Budget this Autumn.

Today’s announcements do little to support key sectors like manufacturing, aviation and non-food retail – sectors with many redundancies already announced and more likely to come.  Much of the current Covid-19 support has been sector agnostic and it will be interesting to see whether the Chancellor’s announcements and interventions in the next few months start to focus on sectors and businesses that are viable in the long term but likely to struggle in the short term due to the pandemic.