Coronavirus Mini Budget Update – 8 July 2020

Following the “Mini Budget”, or “Summer Statement” earlier today, we wanted to share the key headlines with you from the new £30bn package of support to help the UK economy bounce back, as soon as possible. Whilst, as always with Government announcements, the devil is in the detail and this will only emerge once the dust settles, but we wanted to share the headlines, at least with you, at this stage.

Headlines

The extra government spending includes:

• £9bn end-of-furlough bonus;
• Stamp duty threshold raised to £500,000 until March 2021;
• Hospitality VAT cut from 20% to 5%;
• £2bn for youth employment; and
• £3bn green infrastructure budget.

The Chancellor, Rishi Sunak has had something of a baptism of fire since he took over the role; a week into the job he announced his first Budget back in March, only for it to be put to the back-burner within days due to the coronavirus, with the ‘unprecedented’ £350bn economic package to prevent potentially the biggest economic contraction in 300 years.

However, now the Job Retention (AKA furlough) Scheme and Self-Employed Income Support Scheme (AKA SEISS) are being phased out as they are not affordable forever, further action was required to avoid a cliff-edge for the economy, especially with the furlough scheme alone currently paying the wages of over 25% of workers.

Please note that the next annual Budget is due in the autumn (AKA Autumn Statement) and is expected to remain the main event in the fiscal calendar this year.

Jobs and training

“Jobs, Jobs, Jobs” was the key message from today, focusing on protecting workers and creating employment. The key measures included:

1. Businesses will get a £1,000 job retention bonus for every furloughed worker that is brought back and employed until the end of January 2021. This will cost up to £9bn. Workers must have been continuously employed and earn an average of more than £520 per month in November, December and January to qualify.
2. The “Kickstart Scheme” was announced as a £2bn fund to create government-subsidised jobs for unemployed young people (16-24 year olds) for six-month placements, in an effort to stop them becoming long-term unemployed. The Treasury will cover the National Minimum Wage for each young employee for up to 25 hours a week with employer’s paying anything above this.
3. £111m will be invested to triple the number of traineeships, with businesses offered a £1,000 per trainee payment (up to 10 jobs per firm).
4. For the next six months, the Government will pay businesses:
   1. Up to £2,000 for every new apprentice under 25 hired; or
   2. £1,500 for every new apprentice above 25 hired.
5. Funding for the National Careers Service will be increased by £32m over the next two years while the number of work coaches will be doubled to help unemployed people find jobs.

Hospitality and Tourism

Two key measures were announced here:

1. “Eat out to help out” vouchers for meals out at cafes, restaurants and pubs, with conditions, for August. Meals eaten at any participating businesses on Monday to Wednesday will receive the 50% discount, up to £10 per head; and
2. There will be a temporary cut to VAT on food, accommodation and attractions from 20% to 5%

Whilst both measures are designed to jump start these sectors, which are in much need of support, it remains to be seen if they will be significant enough to bring them back to life.

Housing Market

There will be an emergency stamp duty holiday to help revive the property market. The first £500,000 of purchases will be exempt from stamp duty, saving an average of £4,500 and up to £15,000 per sale. The increase in the threshold from £125,000 to £500,000 is effective immediately and will run until the end of March 2021.

Green Investment

Not quite the Green New Deal, but a £3bn package of green investments have been announced to create thousands of jobs, with:

1. £2bn of grants for homeowners to pay for “green” upgrades to make their houses more energy efficient. They include vouchers worth up to £5,000 (£10,000 for poorer households) to make the upgrades, such as loft and wall insulation. It is hoped this will help support more than 100,000 green jobs;
2. Up to £40m will be provided for a Green Jobs Challenge Fund to create 5,000 jobs at environmental charities and public authorities. Some £100m of new funding has been set aside for direct air capture, a technology that takes carbon dioxide out of the air, while an extra £10m will be given for new electric car development projects; and
3. £1bn set aside to help make public sector buildings greener.

Whilst a lot of the above measures were, at least rumoured, in the week leading up to the announcement, the most notable omission above appears to be any further help for the self-employed with the Self-Employed Income Support Scheme coming to an end effectively in October. Let’s hope there is further movement in this area given this section of the economy is often the hardest hit.

Contact Black and White Accounting

These are unprecedented times. If you want someone to talk through your position with, you need help with modelling your scenario and what could happen, or need clarity on any of the above, please get in touch with us today.

Even if it is not our direct help, but some one of our Strategic Partners, do get in touch and we can see who is best placed to help you. At this time especially, they could include a Business Recovery Specialist, Debt Advisor, Debt Collector or HR Consultant, to name but a few.

Email us, complete the ‘Got a Question’ form on the right-hand side, or call us today on 0800 140 4644. We look forward to talking further with you.