Rishi Sunak has unveiled a package of measures to alleviate pressures on the economy as a recession looms and unemployment looks set to rise.
Outlining the scale of the challenge ahead, the chancellor told MPs the UK economy had contracted by 25 per cent in two months – the “same amount it grew in the previous 18 years”.
Here The Independent looks at the headline policies announced by Mr Sunak in his emergency summer economic update to MPs, which comes as the coronavirus lockdown is eased. The package unveiled today is expected to cost the Treasury around £30bn.
Stamp duty scrapped for homes under £500,000
In an attempt to kickstart the stalled housing market, Mr Sunak is increasing the stamp duty threshold from £125,000 to £500,000 in England and Northern Ireland, taking effect immediately and lasting until March 31 next year.
He said this would benefit nine in 10 homebuyers, saving £4,500 on average.
“Uncertainty abounds in the market – a market we need to be thriving,” he told MPs.
Job retention scheme bonus
The chancellor said employers that bring back an individual who was furloughed during the coronavirus lockdown – and continuously employ them until the end of January 2021 – will be paid a £1,000 bonus per employee. He said the bonus scheme would cost £9bn if all employers took full advantage.
‘Kickstart scheme’ for young people
The new scheme will directly pay employers to create jobs for any 16- to 24-year-olds who are on universal credit, and “at risk of long-term unemployment”, Mr Sunak said. The chancellor insisted these jobs, with a minimum of 25 hours per week, will paid at least the government’s national minimum wage. It is expected that individuals will be in the first jobs by the autumn, with an initial £2bn set aside for the scheme.
“If employers meet these conditions, we will pay young people’s wages for six months, plus an amount to cover overheads,” he told MPs.
Meal vouchers for all citizens
In an attempt to get customers back into restaurants, bars and cafes as the lockdown eases, the chancellor announced everyone in the country will be eligible for “Eat Out to Help Out” vouchers.
Meals eaten at businesses participating in the scheme, which runs on Mondays, Tuesdays and Wednesdays next month, will be 50 per cent off per head, Mr Sunak said.
“Businesses will need to register, and can do so through a simple website, open next Monday. Each week in August, businesses can then claim the money back, with the funds in their bank account within five days.”
VAT slashed for hospitality sector
For the next six months, VAT, which is currently 20 per cent, will be cut to 5 per cent on food, accommodation and attractions.
“This is a £4bn catalyst for the hospitality and tourism sectors, benefiting over 150,000 businesses, and consumers everywhere – all helping to protect 2.4 million jobs,” Mr Sunak claimed.
Green homes grant
The chancellor said he wanted to place the environment at the heart of the economic recovery, introducing a £2bn green homes grant. A further £1bn will be made available to improve the energy efficiency of public sector buildings, he said.
“From September, homeowners and landlords will be able to apply for vouchers to make their homes more energy efficient and create local jobs,” Mr Sunak said. “The grants will cover at least two thirds of the cost, up to £5,000 per household. And for low income households, we’ll go even further with vouchers covering the full cost – up to £10,000.”