Chancellor Rishi Sunak has issued an urgent summer statement to help people get to grips with their finances as we begin to re-open our country – many are calling this package of announcements the summer ‘mini-budget’.
A lot of different groups need support and these new measures aim to distribute financial help across ta variety of areas. Today we’re going to focus on the changes that have been made specifically to benefit businesses.
Planning for jobs
The biggest business issue that Sunak wants to tackle is that of job cuts. When the furlough scheme ends many employers will be facing the difficult task of making employees redundant. The new “three point plan for jobs” offers several measures to help businesses create new jobs and protect their existing workforce:
- Employers will receive £2,000 for taking on new apprentices under the age of 25, or £1,500 for taking on those over 25.
- A new ‘kickstart’ scheme has been launched to help cover the wages of universal credit claimants who are aged between 16 and 24 and at risk of long-term unemployment. National living wage will be covered for 25 hours a week and up to six months of work, and there will also be money to help cover overheads.
- Investment in construction projects to help generate new jobs. This will cover areas such as hospital and school maintenance and road improvement.
The government will also be offering support for those who have employees on furlough. Although the furlough scheme is being brought to an end, it will be replaced with the Job Retention Bonus: a bonus of £1,000 paid out to companies for every furloughed employee who is still employed at the end of January 2021.
Help for hospitality
It’s no surprise that there will be extra measures to support those in the hard-hit hospitality and tourism industry. The first is a reduction in VAT, which will be cut from 20% down to 5%. It’s up to businesses to decide whether these cuts are reflected in lower prices (attracting more customers), or used to help increase the profit margin on their goods and services.
There will also be an “eat out to help out” initiative, giving everyone in the UK a 50% discount (up to £10 per head) for visiting restaurants, cafes and pubs on Mondays – Wednesdays throughout August. Businesses will need to offer the discounts up front, but you’ll be able to claim the money back quickly – it will enter your account within five working days.
Both of these new schemes should help businesses bring customers through the doors this summer, which will be a vital part of building a healthier economy. The VAT cut will cover hotels and other attractions as well as dining establishments.
What’s next?
This is a pretty generous package for businesses, but there will likely be more to come. The chancellor will need to watch carefully to see how well businesses recover from the strain of the past few months before deciding how generous to be with the Autumn budget. Don’t forget that there are also grants and loans available for struggling businesses – such as the bounce back loan scheme, designed to help small businesses cover the costs associated with coronavirus.