Yesterday, the Chancellor presented the 'Mini Budget', aimed at stimulating the recovery of the economy and specifically targeted the hospitality and housing market; which have been particularly affected by the COVID19 lockdown.
Whether the measures announced will be sufficient to kick-start these sectors remains to be seen, but if business and life is to return to normal then we have to start somewhere.
Significant cut in VAT
We have a significant cut in VAT from 20% to 5% from next Wednesday 15 July until 12 January 2021. This reduction will apply to food purchased from restaurants, cafes and pubs as well as accommodation in hotels, B&B's and caravan sites. It will also cover attractions including cinemas, theme parks and zoos. (Loud clapping was apparently heard from the penguins at London Zoo.)
'Eat out to help out' scheme
In addition to this, everyone in the country is being given an 'eating out discount' to encourage people to eat out at restaurants cafes and pubs during August. This will give a 50% discount on food and drinks up to a maximum of £10 per person if you eat out between Monday to Wednesday. August is a good choice, as half the population will be out of the country enjoying their long-overdue summer holidays. Businesses will be able to claim the money back with an assurance that the funds will be in their bank account within five working days.
Hospitality has been the hardest hit sector throughout lockdown and is where there is the most concern about redundancies particularly when furlough ends in October.
Housing sector & stamp duty
Concerning the housing sector, a stamp duty holiday will exist until 31 March 2021 for properties under £500k. The current limit is £125k. An average stamp duty bill of £4,500 will be saved as a result of this announcement. The increase in the exempt threshold is effective from today.
Employment & traineeships
Other announcements focused on jobs and training as it is the impact on employment; or rather unemployment, that the Government is most concerned about.
When furlough ends in October there were concerns that redundancies would increase dramatically. So a 'Job Retention Bonus' has been announced for employers of £1,000 per employee if they bring back furloughed workers who are then continuously employed until the end of January 2021. Employees must have earned an average of £520 per month in November, December and January for employers to qualify.
Also announced was a plan to create more traineeships with £1,000 per trainee available to employers capped at 10 jobs per firm.
A 'kickstart' scheme will subsidise employers up to 100% of the National Minimum wage for 16 - 24 year olds for six months working up to 25 hours per week. Employers will be able to top up the employees' pay.
The other main announcement was that for the next six months, the Government will pay businesses up to £2,000 for every new apprentice they take on. The figure is reduced to £1,500 for those aged over 25.
Some extreme measure for extraordinary times. But they are only a stopgap. We all need to get back into our workplaces and normal daily routine as soon as possible if the economy is to survive, let alone recover.