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CHANCELLOR SPELLS OUT HIS PLANS TO GET THE ECONOMY MOVING AFTER COVID19
Chancellor Rishi Sunak has laid out the Government’s plans to get the economy moving now that lockdown has started to ease.
In his summer statement earlier today he outlined a range of measures which he feels will help the UK move forward addressing issues including housing, hospitality & tourism and the employment landscape for young people.
- VAT cut for the hospitality sector from 20 per cent to 5 per cent.
- £1,000 bonus for employers who bring back an employee off of furlough between November and January.
- Stamp duty cut until March 31 next year raising the threshold from £125k to £500k before stamp duty kicks in.
- Eat Out to Help Out voucher scheme for people to eat out in August, Monday to Wednesday
- A ‘kickstarter’ programme for jobs for those aged 16 to 24 who are deemed to be ‘at risk of long term unemployment’.
Liz Hutchings, founder of Total Guide To Bath said:
“For our situation and several of our clients we really couldn't have asked for more from Rishi Sunak's summer budget. Personally I've been nervous about the furlough scheme gradually being phased out and ending in October. Many businesses will have been starting to panic so the Job Retention Bonus will definitely take some of the fear away and save jobs.
“That coupled with the "kickstart scheme" to get unemployed 16 to 24-year-olds into work and new payments for businesses hiring apprentices should greatly help us avoid a major unemployment crisis and future skills shortage.
“The temporary VAT cut for hospitality and tourism and the "Eat Out to Help Out" scheme will no doubt help a lot of our clients in the hospitality and leisure sector. The £1 billion for local projects to boost local economic recovery in the places that need it most could be beneficial to some of our TGt locations.
“Hopefully this boost in confidence will get the economy going. I just hope that things are back to 'normal' by the time many of the schemes end in Spring 2021. That being said, there is a lot for us to be positive about for now so should all use the help and rally together to get things moving and make sure we are in a good place for when that does eventually happen!”
Oli Thomas, of Purple Lime accountancy said:
“The hospitality sector is being heavily supported with VAT cuts and plans for government subsidies to offer customer discounts. This is a clear move showing the government is concerned about one of the sectors that has been the most severely impacted. The VAT cuts, as we saw during the last recession on a wider scale, will take some administration in terms of businesses recording their sales and filing VAT returns. Technology in sales and accounting systems will help automate this.
“As the furlough scheme (JRS) reducing and its eventual end there are concerns of mass redundancies. While the government is incentivising employers to keep staff, for some businesses hit particularly hard, the grant amounts won’t be enough to sway their plans to reduce staff costs.
“The Stamp Duty Land Tax has been exempted for all properties up to £500k. This aims to kick start the housing market and similar, less aggressive policies, have proved successful previously – so we’re hopeful this will be a positive move.”
Jamie Martin, Managing Director of Correct Careers Coaching said:
“It was brilliant to hear The Chancellor of the Exchequer backing a £2 billion "kickstart scheme" to support young people by creating more jobs and work placements. COVID-19 has had a huge impact on the job market, providing uncertainty for Generation Z. A fund to support the next generation for training and career direction will only benefit the future of the business community over the next few years.”
Accountant Mike Lloyd, of Haines Watts Swindon also thought the statement was positive:
“Overall there was a positive vibe. It illustrated the second of three phases of the recovery. Phase one was support, this phase is all about jobs with phase three focussed on rebuilding. There were a number of targeted measures to support, create and protect jobs including employer incentives for returning employees from furlough and creating new jobs for young people. There were also stamp duty cuts, VAT reductions in the hospitality and tourism sector and a voucher system for discounted meals out.
“The autumn statement to come which will undoubtedly focus on the financial reckoning of how it is all going to be paid for.”
Chris Spratling of Chalkhill Blue said:
“Prior to today’s announcement, we have already seen an unprecedented level of support for the economy and businesses in particular. The new “kickstart scheme” to get younger workers into high-quality traineeships will be another massive help for both our young workers and the more forward-looking company owners who want to tap into the rich pool of young talent that exists here in the UK.
“As a business community, we really have a great opportunity to create a “new normal” that is far, far better than the old one. The biggest challenge for many business owners remains a “mindset” one and whether they are prepared to harness their existing entrepreneurial skills, learn new ones and show real leadership amidst these turbulent times.”
However there has been criticism around no clear plan for ‘green growth’, the fact that lifting the stamp duty threshold will be of limited value for first-time buyers, and there was no mention of help for some owners of small and micro businesses who have had no support because they are directors of limited companies.
Nicki Kinton of Confident Cashflow in Swindon said: “With the heavy focus on job retention and supporting the hospitality, entertainment and travel industries there’s not much in it for businesses in other sectors.
That said the incentives to bring back employees from furlough and keep them employed, and the temporary stamp duty threshold increase should act as a stimulus for the economy and give the public, and businesses, a little more spending confidence.
“We are still yet to understand how the billions of pounds in lost tax revenue and increased spending will be recouped but that is a question for future budgets."
Wiltshire-based business psychologist Jan P De Jonge of People Business Psychology said:
“Small businesses and especially the many self-employed will still feel rather left out in the stinging cold this summer. It will take a huge effort from central government to try to turn this sentiment around.”
Gina Broadhurst, founder of the campaign group #forgottenltd, said:
“It makes no sense for the Government to reward companies for bringing employees back from furlough or creating new apprenticeships if those same companies are going out of business.
“This strategy is premised on businesses remaining solvent, but hundreds of thousands of small business owners employing millions of people have received zero support and are on the verge of collapse.
“Small businesses have been abandoned. The cracks in the Government’s support packages are getting wider. And at this rate more businesses will fall into them, never to be seen again.”
If you want to catch up on what the Chancellor outlined in his summer statement you can visit https://www.bbc.co.uk/news/business-53334083
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