Chancellor’s summer economic statement sets out new measures to support employers

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Please Note: All information correct at time of writing on 8 July 2020. We do our very best to make sure our information is as up to date as possible, but we’d encourage you to check out our latest articles and to check the government website for updates as they happen.

Today (Wednesday 8 July) the Chancellor, Rishi Sunak, delivered a summer economic statement setting out his plan to “protect, support and create jobs”. These included a number of measures to help boost employment and stave off some of the expected job losses ahead, following lockdown.

Here, we look at the main talking points from the statement and investigate some of them in more depth.

Summer economic statement headlines

  • In two months the UK economy contracted by 25% (the same amount it grew in the previous 18 years).
  • Significant job losses are expected but the Chancellor said that the government will never accept that high levels of unemployment are inevitable.
  • There will be a budget and spending review in autumn.
  • The government is now focussing efforts on their plan for jobs.
  • Although the CJRS can’t continue beyond 31 October, the government are introducing a new Job Retention Bonus of £1000 per employee. This will be paid where employers bring furloughed employees back to work and continuously employ them through to January. People must not be brought back just for the sake of it, they need to be doing decent work. To qualify, the employee must be paid at least £520 on average on each month from November to January (equivalent to the National Insurance lower earnings limit).
  • Mr Sunak said the message to business was clear: “if you stand by your employees, we will stand by you”.

The government’s three-point plan for jobs will:

  1. support people to find jobs
  2. create jobs
  3. protect jobs

Let’s take a look at the three-point plan in some more detail.

Supporting people to find jobs

This will be heavily targeted at younger people through the Kickstart Scheme. This is a new programme which will directly pay employers to create new jobs for 16-24-year olds at risk of long-term unemployment. These will be new jobs and the funding will be conditional on the employer proving these jobs are additional.

They will also be ‘decent’ jobs providing at least 25 hours of work per week and paid at least National Minimum Wage.

Employers will also have to provide training and support to help ‘kickstarters’ find a permanent job.

If these conditions are met, the government will pay the young person’s wages for 6 months with an added sum for overheads. Employers can apply to be part of the scheme from next month (August 2020) and the Chancellor hopes to have the first 'kickstarters' in place by autumn.

The Chancellor urged every employer, whether large or small, to hire as many kickstarters as possible. There will be no cap on the number of places available.

The government is also investing further in traineeships. They will pay employers £1000 to take on new trainees and will triple the number of places.

To support 18- and 19-year olds leaving college to find work in high demand sectors such as engineering, construction and social care, the government will be investing £100million to fund more level 2 and level 3 courses.

The government will also be investing in careers advisory services with enough new advisors to support 250,000 more people.

They will also expand their universal skills offer. This provides sector-based work academies which supply training, work placements and a guaranteed job interview in high-demand sectors. The government will triple the number of these places available.

The evidence shows that apprenticeships also work (91% of apprentices stay in work or do further training afterwards). For the next six months, the government will pay employers to create new apprenticeships. They will pay businesses to hire young apprentices with a payment of £2000 per apprentice. They will also introduce a new bonus for businesses hiring apprentices aged 25 or over with a payment of £1500.

Creating jobs

There will be significant investment in infrastructure projects on a national basis and significant investment in green initiatives.

Protecting jobs

These measures will be focused on hospitality and tourism, sectors which together employ more than 2 million people.

VAT on hospitality and tourism is currently charged at 20% but for the next six months VAT on food, accommodation and attractions will be reduced from 20% to 5% from Wednesday 15 July until 12 January 2021.

In August, everyone in the country will receive an ‘Eat out to help out’ discount. Meals eaten at any participating business from Monday – Wednesday will be 50% off up to a maximum discount of £10 per head for everyone including children.

Businesses will have to register, and they will be able to do so from Monday 13 July. Each week in August businesses can then claim the money back and will have the funds in their account within five working days.

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These are challenging times, especially for employees, business owners and employers. Our team of HR and Employment Law experts provide you with the latest government news to help you work through this difficult period.

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