How will today’s Summer Economic Update affect you?

July 8th, 2020

Today’s Summer Economic Update (or “Emergency Budget” as it has been dubbed) enabled the Chancellor to set out the Government’s second phase response with a targeted ‘Plan for Jobs’; the principal purpose is to support the UK’s economic recovery while continuing to prioritise people’s health.

The Government’s initial response was to support families and businesses through the pandemic. The Plan for Jobs is the next step towards the UK’s economic recovery and securing its long-term prosperity.

The third phase will be set out in the autumn, with measures to support the longer-term recovery through a Budget and a Spending Review.

A comprehensive outline of the plans can be found at https://www.gov.uk/government/publications/a-plan-for-jobs-documents/a-plan-for-jobs-2020, but the headlines of this second phase are set out below.

Job Retention Bonus

The Coronavirus Job Retention Scheme (CJRS) has so far supported more than one million employers to protect in excess of nine million jobs.

The CJRS has been in operation since March 2020 and will end on 31 October 2020. Employees who have been furloughed need to be supported back to work and to achieve this, the Government is introducing a new Job Retention Bonus to reward and incentivise employers who retain furloughed staff members.

Although further details will be released this month, the Government intend to introduce a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021.

Employees must earn more than the Lower Earnings Limit (£520 per month), on average, between the end of the CJRS and the end of January 2021. Bonus payments will then be made from February 2021.

Supporting Jobs

The Government want to help those who unfortunately lost their jobs to re-enter the labour market, and quickly. To support this, it will introduce a new Kickstart Scheme to fund the direct creation of high-quality jobs for young people at the highest risk of long-term unemployment.

The £2billion fund is expected to create hundreds of thousands of high-quality six-month work placements, aimed at those aged 16 to 24 who are on Universal Credit and are deemed to be at risk of long-term unemployment.

High-quality traineeships for young people – An additional £111 million is to be provided this year for traineeships in England, to fund quality work placements and training for 16 to 24-year-olds. This funding is enough to triple participation in traineeships. The Government will fund employers £1,000 for each trainee that they provide with work experience.

High value courses for school and college leavers – The Government will provide £101million for the 2020-21 academic year to allow those in England aged 18 and 19 to study targeted, high value Level 2 and 3 courses when no employment opportunities are available to them.

Protecting Jobs

The hospitality sector has taken a heavy toll during lockdown and many firms still face great challenges. The Chancellor’s new ‘Eat Out to Help Out’ scheme aims to support c.130,000 businesses and help protect c.1.8 million jobs by encouraging people to dine out once again.

This will entitle every diner 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. Participating establishments will be fully reimbursed for the 50% discount.

There is to be a temporary VAT cut from 15 July 2020 to 12 January 2021 from 20% to 5%, applicable to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK.

A temporary VAT cut for accommodation and attractions to a reduced rate of 5% will be available from 15 July 2020 to 12 January 2021, to support accommodation and admission to attractions across the UK.

Further guidance on the scope of both reliefs will be published by HMRC in the coming days.

Housing

The Chancellor acknowledged the damaging effects of the pandemic on the housing market. According to Nationwide, UK house prices fell in the year to June 2020 for the first time in almost eight years.

The outlook for the housing market is closely linked to consumer confidence and therefore central to the economic recovery. To regain confidence in the property market and maintain the growing momentum since the easing of lockdown, there will be a temporary Stamp Duty Land Tax (SDLT) cut. The Nil Rate Band of residential SDLT, in England and Northern Ireland, will increase from £125,000 to £500,000 and will apply from 8 July 2020 until 31 March 2021.

Green Homes Grant – The Government will introduce a £2billion Green Homes Grant, providing at least £2 for every £1 that 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.

Given the importance of the UK construction sector for the recovery of the economy, further measures were proposed:

Construction Talent Retention Scheme – The Government is funding a Construction Talent Retention Scheme to support the redeployment of workers at risk of redundancy. This will help retain construction skills and match talented workers to opportunities across the UK.

Green Jobs Challenge Fund – Up to £40million will be invested in a Green Jobs Challenge Fund for environmental charities and public authorities to create and protect 5,000 jobs in England. The roles will involve improving the natural environment, including planting trees, restoring habitats, clearing waterways, and creating green space for people and wildlife research and science talent across the UK and internationally.

Social Housing Decarbonisation Fund – The Government will establish a new Social Housing Decarbonisation Fund to help social landlords improve the least energy-efficient social rented homes, starting with a £50 million demonstrator project in 2020-21 to decarbonise social housing. This will mean warmer homes and lower annual energy bills for some of the lowest income households.

Affordable Homes Programme – The £12.2 billion Affordable Homes Programme announced in the Budget will support up to 180,000 new affordable properties for ownership and rent in England.

Short-Term Home Building Fund extension – It will support small- and medium-sized housebuilders that are unable to access private finance by boosting the Short-Term Home Building Fund, providing an additional £450million in development finance. A proportion of this fund will be reserved for firms using innovative approaches to housebuilding such as ‘Modern Methods of Construction’.

Brownfield Housing Fund – The Government will allocate a £400 million Brownfield Housing Fund to seven Mayoral Combined Authorities to bring forward land for development and unlock 24,000 homes in England.

Planning reform – New legislation will be introduced in summer 2020 to make it easier to build better homes in the places people want to live. New regulations will make it simpler to convert buildings for different uses, including housing, without the need for planning permission.

Accelerating investment

There is a host of detail concerning intended investment into public services, specifically health and education:

NHS maintenance and A&E capacity – The Government will provide £1.05billion in 2020-21 to invest in NHS critical maintenance and A&E capacity across England.

Modernising the NHS mental health estate – Up to £250million will be allocated in 2020-21 to make progress on replacing outdated mental health dormitories, with 1,300 single bedrooms across 25 mental health providers in England.

Health Infrastructure Plan – A further £200million will be invested in the Health Infrastructure Plan to accelerate a number of the 40 new hospital building projects set to begin across England.

School estate funding – The Government will provide additional funding of £560 million for schools in England to improve the condition of their buildings and estates in 2020-21.

School rebuilding programme – More than £1 billion will fund the first 50 projects of a new, ten-year school rebuilding programme in England. These projects will be confirmed in the autumn.

Towns Fund capital acceleration – The Government will accelerate £96 million of investment in town centres and high streets through the Towns Fund this year. This will provide up to 101 towns across England with funding for projects such as improvements to parks, high streets and transport.

Local road maintenance – £100 million will be invested to deliver 29 local road maintenance upgrades across England in 2020-21, including eight bridge and viaduct repairs and improving local roads.

We will continue to keep you informed as more information is revealed.

To discuss any of the above announcements in more detail, please contact your usual Champion advisor.


BACK TO NEWS PAGE »
Latest News

A view from the top | Friday 31 July Edi...

July 31st 2020

A view from the top | By Ged Cosgrove, group managing partner The Coronavirus has brought with it m...

Solicitors: preparing for the PII renewa...

July 30th 2020

In this article, John Jones, MD of Champion Professional Risks – our specialist Professional Indem...

Focus
management accounts

Xero | Making Tax Digital Why Xero accounting is the digital tax platform for you ...

management accounts

Sage Business Cloud | Making Tax Digital Why Sage Business Cloud or Sage 50cloud is...

SPOTLIGHT ON R&D

Procter's Cheeses

Procter's Cheeses

Leading cheese manufacturer, Procter's Cheeses, has been developing its products for almost 30 years and produces more than 200 tonnes of cheese each year.

Our Tweets

Champion Accountants

Growth Protection Core Support Menu
Contact