Sunak's Plan for Jobs

Here are some of the key details of the latest round of measures from the UK government designed to protect jobs.

An economy in recession

The International Monetary Fund estimates that the global economy will contract by 4.9% in 2020

In March-April the UK economy contracted by 25% and significant job losses are forecast in the months ahead especially when the Job Retention (furlough) Scheme closes on 31st October 2020.

According to the latest UK macroeconomic forecasts, the Treasury says that "the UK economy could be facing its largest annual fall in output in over three hundred years and that the unemployment rate could peak at up to 10% of the labour force."

An end to the furlough job retention scheme

Over half of UK firms surveyed have said that they do not intend to keep all of their furloughed workers on the payroll when the scheme comes to an end.

The furlough scheme will be replaced by a new Job Retention Bonus of £1,000 per employee brought back from furlough and keep employed until the end of January 2021.

Kickstart scheme for young people: Pays employers to create new jobs for 16-24 year olds. Minimum of 25 hours a week paying at least the national minimum wage. Government will pay young people's wages for 6 months (averaging £6,500).

Increased government funding for traineeships and careers advice. The government will pay employers to create new apprenticeships (2,000 per apprentice) + bonus for businesses to hire apprentices of 25 years and over.

Economists at the IFS commented that:

"A surprising aspect of the jobs retention bonus is it is payable for any employee furloughed at any point even if already back at work. Much of this spending will be pure deadweight - going to employers who have already/would anyway bring workers back."

Measures to stimulate employment

£2 billion Green Homes grant scheme - from September, homeowners/landlords can apply for a grant up to £5,000 per household to cover the cost of improved energy efficiency.

Housing - cut in Stamp Duty. Threshold for stamp duty exemption increased to £500,000 - a temporary cut running through to the end of March 2021.

Hospitality and tourism sectors - both sectors hit hard by a slump in social consumption spending. They employ over 2 million people. 1.4 million workers have been furloughed.

1. VAT cut: VAT on food, accommodation and attractions will be cut from 20% to 5% from 15 July until 12 January
2. Early bird special: For month of August, everyone gets a discount voucher of £10 per head for eating out on Monday to Wednesday

Economists at the IFS said of the cut in VAT for hospitality:

"Cutting VAT and discounting restaurant meals will increase output in these sectors if businesses have the capacity to serve more customers despite social distancing requirements."