2020 Summer Statement by Chancellor Sunak of UK

a featured image of a blog post that highlights the topic 2020 Summer Statement by Chancellor Sunak of UK

Chancellor Rishi Sunak delivered his Summer Economic Update where he broke down the UK government’s strategies and corresponding budget for the next phase of promoting economic recovery which is the summer statement.

Because the COVID-19 pandemic wasn’t just a health crisis but an economic problem as well, a lot of industries have been hit, some harder than others. People are concerned about its repercussions to their livelihoods in the coming months. After flattening the virus’s curve, it is time to focus on making headway in flattening the unemployment curve.

In Chancellor Sunak’s statement, he acknowledged the people’s worries and reinforced that the government will be taking an active role in ensuring that their jobs are protected. He also outlined several projects designed to help jumpstart the UK’s economic recovery and reiterates that this is just the beginning.

We made a list of the key points in the chancellor’s statement.

1. VAT Cut for the Hospitality Sector

In order to encourage consumers’ patronage of hospitality and tourism services, an industry of over 2 million employees, the government issued a cut on VAT. The cut will start on July 8, 2020, bringing the VAT down from 20% to 5% on food, accommodations, and attractions. It will be enforced for the next six months, until January 12, 2021. The government is allotting a £4-billion budget to support more than 150,000 businesses and consumers.

This will also help boost the UK’s tourism, and invite the locals to enjoy the summer, boosting the economy by encouraging holiday spending and getaways.

2. “Eat out to Help out” Scheme

This project is one of the more unique and unusual ideas announced during the summer statement. Inspired by the nudge theory, it rests on the idea that small decisions made by the government can encourage a big change in consumer behaviour. This half-a-billion £ project supports over 1.8 million employees working in pubs, restaurants, and cafes. “We can all eat out to help out,” is chancellor Sunak’s invitation to the public.

Starting in August, discounts (ranging from 50% off to a cap of £10 per head) are given on meals eaten in participating businesses, from Mondays to Wednesdays. Businesses who want to participate have to register through a website that will be launched on Monday. A claim-back system is in place, where firms can claim their money in their bank accounts within five working days.

3. Temporary Stamp Duty Holiday

Good news to everyone planning to buy or sell a house: stamp duty will be temporarily cut, effective immediately. This is in order to reinvigorate the housing market. The threshold for stamp duty will increase from £125,000 to £500,000 and will continue to run until March 31, 2021.

4. Green Infrastructure Investment

Energy-efficiency in houses and public buildings and net-zero emissions by 2050 are parts of the green recovery project of the government. Concern for the environment, and eco-friendly sustainability, are at the heart of this £3 billion project whose goal is to decarbonise houses and public buildings.

Of the £3 billion budget, £2 billion will be dedicated to retrofit houses with insulation that help cut carbon emissions. Vouchers worth £5,000 and up to £10,000 for poorer families will be made available. The remaining £1 billion will be allocated to making public buildings greener.

5. Apprenticeship & Training

The government is also dedicating a £1.6 billion budget to ensure that workers can continue honing their skills and competencies. Jobcentre work coaches will be doubled in number. The government also encourages firms to accept trainees and apprentices. They will pay £2,000 per apprentice hired (£1,500 for apprentices aged over 25) and £1,000 (per person) to take on trainees. This is a limited-time offer for employers who will apply between August 2020 and January 2021.

6. Job Retention Bonus

Sunak confirms from his summer statement that the furlough scheme will wind down flexibly and gradually until the end of October. According to him, leaving the scheme open indefinitely only gives false hopes to employees that it is always possible to return to the jobs they had before. A job retention bonus will be provided as the scheme winds down, with the government paying companies £1,000 for every retained furloughed employee–a feat that would cost the Treasury £9 billion to protect every furloughed job.

7. Kickstarter Scheme

The youth is the future, chancellor Sunak believes. A £2-billion budget for the “kickstart” scheme will be allocated to fund the job creation of over hundreds of thousands of available posts for young employees. For six months, the government will be shouldering the wages of the newly-hired youth.

As the UK enters the second phase of its economic recovery response, chancellor Sunak assures the public that the government will put the public finances to work. Through these projects, the government endeavours to bring the country back on an economically sustainable footing as Britain rebuilds and recovers from the repercussions of the pandemic.

Of course, amid a lot of uncertainty over the future and whether these short-term responses will be enough to usher economic recovery, it is only natural that a lot of people remain restless. From a business standpoint, how these strategies the summer statement specifically, will affect your business remains yet to be seen in the coming months. However, it is a concrete step offered by the government, that business owners can take advantage of, to aid in the recovery.

For more news and updates about the UK economy just look through Annette & Co.

About the Author

Annette Ferguson 

Owner of Annette & Co. - Chartered Accountants & Certified Profit First Professionals. Helping online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.