Rishi Sunak promised to leave “no one without hope” as he unveiled an unprecedented level of employment support to assist in the economic recovery from coronavirus.
In his summer statement on Wednesday, the chancellor pledged £9bn to protect furloughed jobs, kickstart opportunities for young people, slash VAT for the hospitality and tourism sectors, and scrap stamp duty until next year.
Businesses will be paid £1,000 per employee to retain furloughed staff amid concerns that companies are about to sack tens of thousands of workers as the original job retention scheme begins to wind down. Companies will be given £2,000 for each apprentice they take on under the age of 25.
Yet his most significant addition to the job protection measures is the government’s offer to pay the the wages of any new young employee for six months.
Announcing his Plan for Jobs, the chancellor said the government was not going to accept anxiety over job losses and that it would do all it could to “give everyone the opportunity of good and secure work”. He said: “People need to know that although hardship lies ahead, no one will be left without hope.”
A cut in VAT from 20% to 5% for hospitality, tourism and accommodation services – including pubs, restaurants, cafes, hotels, zoos and cinemas – until next January would cost the Treasury £4bn, he said. It is effective from next Wednesday and covers food, accommodation and attractions but will not apply to alcohol.
A new policy, “Eat out to help out”, which the chancellor described as creative and never tried in the UK before, will give people a 50% discount on eating in restaurants and cafes, from Monday to Wednesday throughout August. Businesses will need to register through a website, open from next Monday. The maximum discount per head under the scheme will be £10.
An immediate stamp duty holiday for homes sold for up to £500,000 in England and Northern Ireland until 31 March next year was also announced. Sunak said the move would save jobs in the construction sector and encourage homeowners to move and invest in their homes.
The furlough scheme will be coming to an end in October, the chancellor confirmed, saying he did not want to give people false hope that their jobs would continue in their current form.
“Leaving the furlough scheme open for ever gives people false hope that it will always be possible to return to the jobs they had before,” he said. “And the longer people are on furlough, the more likely it is their skills could fade, and they will find it harder to get new opportunities.
“It is in no one’s long-term interests for the scheme to continue for ever, least of all those trapped in a job that can only exist because of government subsidy.”
The fresh spending commitments came as Sunak said the government would be defined by its response to the crisis and he would never accept unemployment as an unavoidable outcome of the Covid-19 pandemic.
He said the government would fund six-month job placements for an estimated 350,000 18- to 24-year-olds to prevent young people from bearing the brunt of the economic crisis. Each “kickstarter” job will cover 100% of the national minimum wage for 25 hours a week, allowing employers to provide wage top-ups without any clawback of state funds.
People under 25 receive a lower national minimum wage than others, starting at £4.55 an hour for someone under 18, rising to £6.45 an hour for 18- to 20-year-olds and £8.20 an hour for 21- to 24-year-olds.
The chancellor said companies could start making applications for the job subsidies within a month and that the first young people would be employed in the autumn.
In the first two months of the Covid-19 crisis, the number of 18- to 24-year-olds claiming universal credit rose by a quarter of a million to almost 500,000, while it is estimated that 700,000 school leavers and university graduates will enter a depressed jobs market this summer.
The plan revives an idea used by Labour during the global financial crisis that the tax and spending watchdog, the Institute for Fiscal Studies, has already assessed as an effective scheme.
Alongside the youth scheme, the chancellor announced a £3bn green investment recovery package to decarbonise public buildings and cut emissions from poorly insulated homes.
In a further move to generate jobs around the country, Sunak said the plan included £1bn for public buildings – such as schools and hospitals – and a £2bn scheme to retrofit people’s homes. Homeowners will also be able to apply for vouchers of up to £5,000, with up to £10,000 available for some of the poorest families.
“We are doubling down on our ambitions to level up,” he said.
