Sunak’s opening remarks
The chancellor says people are anxious about losing their job and unemployment rising. “We’re not just going to accept this,” he adds.
Sunak says he is announcing a “plan for jobs” to protect, create and support employment.
He says at the start of the crisis the government provided £160bn to cushion the economic fallout from the Covid-19 crisis and lockdown.
Britain is entering the second phase of the government’s economic response, he says. The job of responding to the crisis has “only just begun”, he adds.
The chancellor says the government will put the public finances back on a “sustainable footing”, but he suggests this should be in future as Britain rebuilds.
Kate Proctor, political correspondent: There is naturally deep concern about the economic recovery from coronavirus but the Conservatives are equally as worried about losing ground on their election-winning “levelling-up” agenda and sticking to their promise not to return to austerity. The thousands of voters in the north and Midlands who Johnson accepted had “lent” him their vote are core to the Conservative party’s continued success which is why the economic offer is, in part, so uniquely expansive.
Furlough scheme
The furlough scheme will wind down flexibly and gradually until the end of October, Sunak confirms.
“Leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before,” says the chancellor.
A jobs retention bonus will help to wind down the scheme: businesses will be paid £1,000 to retain furloughed staff. This would cost the Treasury more than £9bn if every job furloughed is protected, Sunak says.
KP: Sunak was extremely firm on having a hard deadline for furlough to be wound down and admits when it does end it will be a “difficult moment”. This was expected but his language was categoric that he cannot be leant on to keep it going. Labour is likely to hit back on this point, suggesting it should be faded out on a sector by sector basis over a longer period of time.
Kickstart scheme
Sunak announces the “kickstart” job creation scheme for young people. The government will pay the wages of new young employees for six months.
There will be an initial £2bn to fund hundreds of thousands of jobs. Sunak says there will be no cap on the number of places available.
KP: The younger generation is being described perhaps optimistically as “kickstarters” in an attempt by government to reframe their economic prospects. This is a significant pledge by the chancellor, particularly the offer to pay the wages of young people going into new jobs for six months, though there will be scepticism that these measures are a short-term sticking plaster. There will be questions on whether any of these new jobs exceed the initial six-month period.
Training and jobs
Jobcentre work coach numbers will be doubled, the chancellor says.
Apprenticeships will be supported by bonuses for companies. Firms will get a payment of £2,000 for each apprentice they take on. Companies taking on apprentices aged over 25 will be given £1,500.
KP: This is a time-limited offer as the bonus scheme is for employers who apply between August 2020 and January 2021. This policy is again open to criticism of short-termism.
Green investment
Sunak says the government wants a “green recovery with concern for our environment at its heart”.
As previously announced, the government will provide £3bn for decarbonising housing and public buildings.
Vouchers worth £5,000 and up to £10,000 for poorer families will be made available out of a £2bn pot to retrofit homes with insulation, helping to cut carbon emissions.
£1bn will be allocated to make public buildings greener.
KP: These are far-reaching plans for energy efficiency through the country’s housing stock but the government is technically committed to net-zero emissions by 2050. That firm pledge appeared to be missing from the “green recovery” portion of the chancellor’s speech. This won’t go unnoticed as there is concern the government is reducing its emphasis on strict targets. Sunak has stood firm though on the government’s environmental record, replying later in the Commons that the UK has decarbonised faster than almost any other European country.
Stamp duty
The chancellor announces he will cut stamp duty to reinvigorate the housing market.
The threshold for stamp duty will increase from £125,000 to £500,000. The cut will be temporary, running until 31 March 2021, and will take effect immediately.
KP: There will be a huge sigh of relief from anyone buying or selling a home as the scheme starts immediately. Earlier reports suggested it would not be introduced until the autumn budget and this rightly caused panic that the housing market would effectively grind to a halt.
VAT cut for hospitality
Sunak says more than 2 million people work in the hospitality and tourism sectors, which have been hit hard by Covid-19, warranting further support from the government.
VAT will be cut from the current rate of 20% to 5% for the next six months on food, accommodation and attractions. The cut lasts from Wednesday 8 July until 12 January 2021.
Sunak says the move is a £4bn catalyst, benefiting more than 150,000 businesses and consumers.
KP: This is an acknowledgement that some sectors have been particularly hard hit compared with others and it should encourage much higher levels of consumer spending. This will also help UK tourism and fits into the government’s push to get people to enjoy the summer, take days out, holiday in the UK, eat out and spend as usual.
Discounts on eating out
The chancellor announces an “eat out to help out discount” to encourage consumers to spend at pubs, restaurants and cafes.
Meals eaten at any participating businesses, from Mondays to Wednesdays in August, will be 50% off up to a maximum discount of £10 per head for everyone, including children.
Businesses will be able to register through a website launching on Monday. Firms can claim money back to have money in their bank accounts within five working days.
Sunak says 1.8 million people work in the industry, whose jobs can be supported. “We can all eat out to help out,” he adds.
KP: This is an unusual idea, which Sunak explained has never been tried in the UK before, and its novelty wore off in a few short seconds. It comes with many caveats, including eligibility criteria for participating restaurants and a claim-back system. The public can only take up the offer of cheaper meals three days a week. It remains to be seen how effective this will be and it may turn out to be more of a gimmick than some of Sunak’s other solid policy offers.