The government has unveiled a £30bn package of support measures designed to help UK businesses recover from the pandemic as quickly as possible.

In his summer statement, Chancellor of the Exchequer Rishi Sunak announced a number of policies aimed at encouraging employers to retain staff who had been furloughed, as well as specific support measures for the hospitality sector and housing market.

Dubbed the “Plan for Jobs”, the mini-budget also included proposals to boost youth employment and stimulate investment in domestic energy efficiency.

Pandemic support to date

Sunak began his statement by looking at the level of government support that had been provided to businesses since the start of the pandemic. He said the official furlough scheme had helped employers pay or supplement the wages of 9 million employees across the UK since it was introduced in March, while a further 2.7 million people had been helped by the self-employment income support scheme (SEISS).

Sunak added that businesses have benefited from tax cuts – such as a reduction in business rates – and deferrals in the likes of VAT and self-assessment payments, while many firms have taken advantage of government loan and grant schemes.

The end of the furlough scheme and the Job Retention Bonus

The chancellor pointed out that employers are likely to face difficult decisions when the furlough scheme comes to a close at the end of October: with all government salary support being stopped at this point, many businesses will have to decide whether to recall staff from furlough or make them redundant.

In view of this, the government is introducing a Job Retention Bonus as an incentive for firms to keep employees on. Businesses will receive a payment of £1,000 for every furloughed member of staff who remains on the payroll continuously until the end of January 2021.

To qualify, the employee must earn above the lower earnings limit (currently £520 per month), with further details to be announced later this month. The scheme could cost the government as much as £9bn, depending on take-up.

Employment support for young people

Sunak announced a number of measures aimed at helping younger people find work. He said that under-25s were more likely to be employed in sectors such as leisure, retail and hospitality that had been hit hardest by the pandemic.

The Kickstart Scheme is a £2bn fund aimed at those aged between 16 and 24 who are receiving Universal Credit and who are considered at risk of long-term unemployment. It will pay for six-month work placements, covering 100% of the national minimum wage – plus national insurance and mandatory pension contributions – for 25 hours a week. Applications will open from next month, with the first ‘Kickstarters’ expected to begin placements in the autumn.

There will also be payments for employers who hire apprentices: from 1 August until the end of January 2021, businesses who take on apprentices under 25 will receive a £2,000 payment, or £1,500 where the apprentice is 25 or older.

More money will also be invested in career advice and traineeships.

Paul Falvey, tax partner at accountancy firm BDO, 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 rethink entry-level roles by subsidising work placements for those aged between 16 and 24 in a very challenging jobs market. This new tack closely aligns to our recent survey, which showed that 72% of respondents agreed that boosting businesses and jobs should be Mr Sunak’s spending priority.”

Housing: stamp duty cut and green investment

With the housing market having slowed and house prices fallen during the pandemic so far, Sunak has drastically raised the starting threshold for stamp duty on property purchases in England and Northern Ireland.

From today until the end of March 2021, the first £500,000 of any transaction will be tax-free, up from the previous £125,000 starting rate. Sunak said this means that almost 90% of buyers will not have to pay stamp duty during this period. For someone buying a £500,000 home, this change will save them £15,000.

Eric Leenders at UK Finance said: “The chancellor’s announcement on stamp duty should give a welcome boost to the housing market and in turn have positive knock-on effects for the wider economy.”

Meanwhile, property owners will be encouraged to improve the energy efficiency of their homes through a new Green Homes Grant scheme. This will provide £2 for every £1 spent on projects such as loft insulation or solar panels, up to a limit of £5,000. Lower-income households may have all their costs covered up to £10,000.

Boosting hospitality and tourism

With many hotels, pubs and restaurants only recently having reopened, Sunak focused a number of his new policies on helping the hospitality and tourism sectors bounce back from the pandemic.

In August, the government will support around 130,000 businesses with its Eat Out to Help Out scheme: this will entitle diners to a 50% discount, up to a limit of £10 per person, when they pay for a restaurant, café or pub meal on Mondays, Tuesdays and Wednesdays. The discount will not apply to alcoholic drinks. Businesses that wish to participate in the scheme will have to apply through a government portal. Sunak says they will be reimbursed within a matter of days.

Meanwhile, VAT is to be cut from 20% to 5% on food and non-alcoholic drinks from restaurants, pubs, cafés and similar establishments from 15 July until 12 January next year. An identical cut will be made over the same period for accommodation and admission to attractions. HMRC will provide further details in the next few days, Sunak said.

Kate Nicholls, chief executive of UKHospitality, said: “This significant VAT cut, heightened ability to retain staff and incentives for consumers to eat out together amount to a huge bonus. We hope that the UK public rightly sees it as sign that we are ready to welcome them back safely. The future of many businesses and jobs depends on it.”

This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of NatWest Group, as of this date and are subject to change without notice. Copyright © NatWest Group. All rights reserved.

scroll to top