Summer Economic Update: "a plan for jobs"

Chancellor Rishi Sunak this afternoon announced measures to support jobs and boost confidence for an economy dealing with the COVID-19 crisis. 

Referring to his announcement as “a plan for jobs”, the chancellor announced a range of measures, which included a VAT cut for hospitality businesses, incentives for employers to re-instate furloughed workers and create roles for young people, as well as support for the housing market. 

A cut in the rate of value-added-tax (VAT) from 20% to 5% applies to hospitality businesses from Wednesday next week until January 2021. This is designed to encourage people to start spending more, after a drop in consumption due to lockdown measures and fears of contracting COVID-19.  To further encourage spending in restaurants, there will also be half-price discounts on meals between Monday and Wednesday in August, of up to £10 per head. 

The chancellor also announced a £2 billion “kickstarter” scheme to support youth employment, through which the government will pay businesses to hire 16-24-year-olds. Meanwhile, businesses that bring furloughed workers back into employment will also be paid a “job retention bonus” of £1,000 per worker. 

To help the housing market, Sunak announced that the stamp duty threshold for home purchases is now lifted from £125,000 to £500,000 until 31st March next year. He also revealed that homeowners will receive vouchers to fund green projects such as insulation. 

A wide-ranging Budget scheduled for the Autumn is expected to contain more detail on how the UK plans to put its finances on a sustainable footing in the long term, after an emergency spending spree that has left the economy shouldering high levels of public debt. 

Acknowledging the scale of the economic challenge, he said: “Although hardship lies ahead, no-one will be left behind.”