Summer Statement 2020
Did Rishi deliver a summer of love to support Boris’s new deal last week?
Let’s take a look at today’s statements and see how it will impact the freelance, micro and small business community.
In short, a bonus payment designed by Rishi to try and prevent a cliff edge to the furlough scheme this October. Businesses will be paid a £1000 bonus for every furloughed employee they bring back to work.
The detail is unclear, but we know that the government will give employers £1,000 assuming they keep the employee employed until January 2021 and pay them a minimum of £520 per month.
Is £1,000 enough for an employer to keep an employee on the payroll if there isn’t the volume of work to support them and given the employer has to start subsidising the employee from next month?
I doubt it.
Maybe this is a nice gimme for employers that stuck by their employees during the toughest times this year.
The masters of spin continue with those snappy names to make us feel all warm and fuzzy about their pet projects.
The scheme is about getting the lost generation of 18-24-year-olds into the workforce from the Autumn.
The government will subsidise a payment of the national minimum wage of 25 hours per week for six months for any company employing someone under the age of 24.
Sceptics wonder how many of these jobs will turn into full-time positions at the end of the scheme, but I see this as a positive move by Rishi.
So much so we are considering altering our own recruitment plans to take advantage of the programme. I’ve also spoken to a few clients today, and in principle, this is getting people thinking about recruiting in late 2020, something they hadn’t considered until this announcement.
Perhaps there is a bear trap somewhere in the scheme, but in the meantime, we’re excited to learn more about Kickstart.
Nothing new about apprenticeships but a one-off bonus will be paid to employers for applications between August 2020 and January 2021.
The bonus will be £2,000 for under 25’s and £1,500 for over 25’s.
Again, is this enough to make a company change its recruitment policy, probably not, but it is supporting those businesses that are trying to grow.
The Green Recovery
A token nod to going green but more of an initiative to keep the construction trade in business as the economy downturns late in 2020.
The government will give vouchers of up to £5,000 per household to retrofit insulation, with the homeowners bearing around a third of the cost themselves.
I’ve seen similar schemes in Europe, and the contractors often increase the standard cost of the work to make more margin rather than saving the homeowner real cash.
Don’t get me wrong, I’m all for cutting carbon emissions but the lack of reference to net-zero emissions by 2050 and Rishi’s lack of reference to this pledge made me a little worried.
Stamp Duty Holiday
First-time buyers and homeowners rejoice as the tax-free ceiling on stamp duty is increasing from £125,000 to £500,000 until March 2021. Rishi said this would save the average house purchase around £4,500.
Whether this came from the goodness of Rishi’s heart or the Conservative 1922 committee who must have some housing assets to shift, this will breathe life into a stagnant housing market.
It’s not going to help the affordability issue impacting many of our clients trying to get onto the ladder.
VAT cut for hospitality
I am jumping back onto my optimism ladder, a scheme that will help the ‘hospo’ industry from today.
A reduction in the VAT from 20% to 5% starting from today.
The additional margin this will give hotels, bars and restaurants will most likely offset the reduced capacity they are currently operating at this summer going into the autumn.
The question is how do you get people back and the tills rolling?
Eat Out to Help Out
Game, set and not quite match on footfall. On the face of it seems like a Daily Mail grabbing headline but I’m getting a little lost on the caveats that the scheme may have:
‘running throughout August, the vouchers will give households a 50% reduction, up to £10 per head, on sit down meals and non-alcoholic drinks. The vouchers will be able to be used on Mondays, Tuesdays and Wednesdays only.’
On a serious note, this could be a welcome relief in stimulating footfall, but I’m not sure it’s going to get the nervous population back into restaurants and creating the summer of love.
All I’ll say is it took Marcus Rashford to keep underprivileged kids eating this summer, and we have more people using food banks than ever before; I’d happily give my vouchers to them.
A continued assault on the Tory leadership continues, Rishi will grab the headlines in middle England and continue to make Boris nervous about his popularity, but apart from helping the youngsters, this didn’t address the big challenges we’re going to face in 2021.
If you have any questions about the Summer Statement, get in touch and we’d be happy to help. Call us on 0203 026 4679 or drop us an email at email@example.com.
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