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The Chancellor’s Summer Economic Update 2020 – What does it mean?

 


Need to know: Emergency Measures for Coronavirus Support

  • £1,000 to employers for every furloughed employee who remains continuously employed through to the end of January 2021
  • Government funding for new jobs employing young people at the highest risk of long-term unemployment for six months
  • £1000 per trainee to employers providing trainees with work experience
  • £2,000 for employers for each new apprentice they hire aged under 25, and £1,500 for each new apprentice they hire aged 25 and over, from 1st August 2020 to 31st January 2021
  • A temporary increase in the Nil Rate Band of Residential Stamp Duty in England and Northern Ireland from £125,000 to £500,000 from 8th July 2020 until 31st March 2021
  • A new Social Housing Decarbonisation Fund to help social landlords improve the least energy efficient social rental homes
  • A Green Homes Grant to provide £2 for every £1 that homeowners and landlords spend to make their properties more energy efficient (up to the value of £5,000 per household) and fully fund energy efficiency measures of up to £10,000 per household for those earning the lowest incomes in England
  • £40m in a Green Jobs Challenge Fund for environmental charities and public authorities in a bid to create and protect 5,000 jobs in England, focussing on improving the natural environment
  • £100m of new funding for researching and developing a Direct Air Capture Programme
  • £10m worth of funding for scaling up manufacturing in the latest technology related to batteries, electronics and fuel cells
  • An ‘Eat Out to Help Out’ scheme, entitling every diner to a 50% discount of up to £10 per head on their meal, at any participating restaurant, café, pub or other eligible food service establishment valid Monday to Wednesday on any eat-in meal for the entire month of August 2020. Participating establishments will be fully reimbursed for the 50% discount
  • A reduction in VAT for food and non-alcoholic drinks and accommodation and attractions to 5% from the 15th July to the 12th January 2021

    What does the Economic Update 2020 Mean for Your Business?

    The Summer Economic Update included a raft of announcements for businesses, particularly in regards to jobs. Announcements include Coronavirus support, decreased VAT and investment in green jobs. Find out what the Summer Economic Update 2020 means for your business.


    What is the Chambers’ Position?

    The GBCC cautiously welcomes the Chancellor’s Summer Economic Update as an opportunity to help get the country’s economy moving again. The scale of support on jobs, through the Coronavirus Job Retention Scheme and now also in regards to youth unemployment will be of significant benefit to many local businesses. However many key issues for businesses were not addressed, in particular, gaps in existing support such as the lack of income-based support for directors of Limited Companies.

    Approach

    The job retention bonus and the Eat Out to Help Out scheme demonstrate a welcome, innovative approach to tackling specific issues that could also be applied elsewhere, and that we hope to see continued in the upcoming Autumn Statement, which will be crucial in terms of mapping out a sustainable return to growth and investment in infrastructure.

    Supporting Young People to Find Jobs

    The Kickstarter scheme is very much welcomed. Rising youth unemployment is an area of particular concern across Greater Birmingham; youth unemployment has been relatively high in the West Midlands for a number of years and young people are currently leaving education and struggling to access an extremely tight jobs market.

    However, this scheme needs to be shaped with direct input from the business community, and careful thought given to delivery in order to be genuinely effective and take lessons from the 2009 ‘Future Jobs Fund’ which it appears to have been modelled upon.

    Support for apprenticeships, level 2 and 3 courses and sector based work academy placements are welcomed by the Chambers. The detail in how apprenticeship grants will be issued has not yet been made available; however, it will be essential that this support is available without red tape, particularly regarding repayment conditions.

    Traineeships have traditionally not been too popular with candidates, however, Government plans to improve provision, if these are able to ensure that traineeships are high quality, genuinely advantageous initial opportunities for young people, may aid in attracting the volume of learners the Chancellor is expecting.

    Creating and Protecting Jobs

    The GBCC would support protecting jobs further through increasing the Employment Allowance for SMEs from £4,000 to £20,000 for an initial 18 month period and increasing the threshold for National Insurance contributions from £8,788 to £12,500.

    Initiatives to create green jobs and fuel an environmentally sustainable recovery will benefit a number of individuals and businesses in the region, however,Recharge the West Midlands Investment Case to Government the GBCC would further like to see Government investing in environmental sustainability in the West Midlands by backing the West Midlands Combined Authority’s Recharge the West Midlands Investment Case to Government.

    Stimulating Consumer and Business Confidence

    The Chamber is pleased to see a reduction in VAT for some struggling sectors but would have supported a VAT cut for all businesses.

    The Chamber’s Unprecedented Times report, combining in-depth analysis of data on local business performance throughout the lockdown and policy recommendations (click here) suggests a multitude of further measures to stimulate consumer and business confidence, which have not yet been addressed by the Chancellor.

    These include: delivering a moratorium on all policy measures, including new regulations, that increase business costs for the life of this parliament; extending the duration and scope of the £1m Annual Investment Allowance; radically reforming the Business Rates system to make taxation fit for business in a digital age; incentivising investment in export, including through the introduction of a new export tax credit and enhanced trade support; and delivering investment in practical support for businesses who will be impacted by changes at the end of the Brexit transition period.

    The GBCC Policy & Strategic Relationships Team can be contacted about their work, sponsoring reports, commissioning research and participation in GBCC campaigns on 0121 725 9002 or emailing policy@birmingham-chamber.com