What to expect from the 2020 Summer Statement?
With the UK still struggling to emerge from lockdown and begin the path to economic recovery, the Chancellor is expected to prioritise jobs and try to restore consumer confidence.
Some of the details have already been revealed.
Job creation
The most eye catching announcement so far is the “Kickstart” job scheme, with £2bn set aside for six-month work placements for 18-24 year olds. Essentially, the government will pay these placements at minimum wage for 25 hours a week, with employers able to top this up should they wish.
The placements will only be available to people claiming universal credit and at risk of long-term unemployment, and the funding is expected to cover around 350,000 placements.
The “kickstart” scheme is expected to open for applications within a month, with the first placements due to start in the autumn.
Firstly, the government is setting aside £111m for the creation of 30,000 new traineeships. These are essentially unpaid work experience placements that last between six weeks and six months for 16-24 year olds, and combine classroom-based lessons with practical work experience.
Unlike the placements discussed above and apprenticeships, traineeships are unpaid, and businesses will be given £1,000 for each traineeship they offer.
Employers must also offer an interview for an apprenticeship or job (if one is available) at then end of the scheme.
The plan has only been announced for businesses in England, but money has been set aside for similar schemes in Scotland, Wales and Northern Ireland.
Stamp duty
While not yet confirmed, a temporary cut in stamp duty is widely expected. Generally referred to as a “stamp duty holiday”, Rishi Sunak is expected to increase the stamp duty threshold from the current level of £125,000 to as much as £500,000, effectively exempting the majority of home buyers from the tax.
This could stay in place for as long as a year and is designed to revive the UK’s flagging housing market, and should be music to the ears of estate agents across the UK.
VAT
Former chancellor Alistair Darling is the highest profile voice to back a temporary cut in VAT to restore consumer confidence and increase spending. Darling, who under prime minister Gordon Brown cut VAT in the wake of the 2008 global financial crisis, suggested it should be reduced from its current level of 20% to 15%.
However, it remains to be seen whether Sunak will take this step, with the government only confirming the measure is being considered.
Other measures
A £3bn “green” investment package will be announced in an attempt to bolster the chancellor’s eco-friendly credentials and “decarbonise” public buildings and poorly insulated homes. The pledge has already been criticised by environmental groups for not going far enough.
A £1.57bn rescue package for the critically threatened UK culture sector will be announced, but the plan is currently light on detail, and it remains to be seen on what basis the extra grants and loans will be allocated. It’s also already too late for some, with the Nuffield Theatre in Southampton announcing on 2 July that it would close permanently after over 50 years of operation.
Arguably the most eye catching proposal came from the Resolution Foundation, a British think tank which suggested the government could implement a £30 billion “high street voucher” scheme that gives every UK adult a voucher worth £500 to spend on sectors badly affected by the lockdown, such as hospitality and in-person retail. A similar scheme was successfully implemented in China to aid that country’s economic recovery.
via https://www.AiUpNow.com/ by Alec Hawley, Khareem Sudlow
