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New stimulus measures announced in Sunak’s ‘economic update’

Date: 09 July 2020

Moving to the next phase of the government’s COVID-19 economic response, the Chancellor outlined new measures to support jobs and provide an economic boost to the sector hit hardest by the lockdown.

The update, and accompanying ‘plan for jobs’, unveils several big policy changes which focus on supporting jobs, protecting jobs and creating jobs. The measures will add a substantial cost pressure on the Exchequer, and the Chancellor acknowledged that the autumn Budget will set out how the government intends to bring the public finances back on a sustainable footing. It is likely that changes to taxation other reliefs will occur at this stage in the autumn.   

The new measures announced by the Chancellor include:

Supporting Jobs: measures to protect jobs and encourage employers to hire young people:

  • New Job Retention Bonus: The government will make a one-off £1,000 payment to UK employers for every furloughed employee brought back from furlough who remains continuously employed through to the end of January 2021.
  • Kickstart Scheme: A new £2 billion fund to create hundreds of thousands of 6-month work placements aimed at those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment. Funding available for each job will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions.
  • Traineeships for young people: An additional £111 million this year for traineeships in England, to fund work placements and training for 16-24 year olds. The government will fund employers who provide trainees with work experience, at a rate of £1,000 per trainee.
  • Payments for employers who hire new apprentices: A payment of £2,000 will be made to employers in England for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over, from 1st August 2020 to 31st January 2021.

Protecting Jobs: measures designed to increase demand in hospitality, restaurants and bars:

  • Eat Out to Help Out: Every diner will be entitled to a 50% discount of up to £10 per head on their meal, at any participating restaurant, café, pub or other eligible food service establishment. The discount can be used unlimited times and will be valid Monday to Wednesday on any eat-in meal (including on non-alcoholic drinks) for the entire month of August 2020 across the UK.
  • Temporary VAT cut for food, non-alcoholic drinks, accommodation and attractions: From 15 July 2020 to 12 January 2021, the reduced (5%) rate of VAT will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK as well as supplies of accommodation and attractions.

Creating Jobs: measures to stimulate the housing market, building and construction:

  • Temporary Stamp Duty Land Tax (SDLT) cut: The government will temporarily increase the Nil Rate Band of Residential SDLT, in England and Northern Ireland, from £125,000 to £500,000. This will apply from 8 July 2020 until 31 March 2021 and cut the tax due for everyone who would have paid SDLT.
  • Green Homes Grant: The government will introduce a £2 billion Green Homes Grant, providing at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household. For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household.

Quilter's response to the new policy measures announced can be accessed by clicking here