New jobs plan, hospitality VAT cuts headline Chancellor's economic update

Delivering his Summer Economic Update in Parliament, the Chancellor has announced a new plan worth up to £30 billion to support jobs, give businesses the confidence to retain and hire, and provide people with the tools they need to get better jobs.

Under his new plan, UK employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021.

“If you’re an employer and you bring someone back who was furloughed - and you continuously employ them through to January – we will pay you a £1,000 bonus per employee,” said Mr Sunak.

“So if employers bring back all nine million people who have been furloughed, this would be a £9 billion policy to retain people in work.”

Moreover, companies will be given £2,000 for each new apprentice they hire under the age of 25.

The Chancellor also announced the launch of a new £2 billion Kickstart Scheme, which is expected to create hundreds of thousands of new, fully subsidised jobs for young people across the country.

According to Mr Sunak, the Kickstart Scheme will directly pay employers to create new jobs for any 16- to 24-year-old at risk of long-term unemployment.

“These will be new jobs - with the funding conditional on the firm proving these jobs are additional,” he explained.

“These will be decent jobs – with a minimum of 25 hours per week paid at least the National Minimum Wage.”

The plan will also protect jobs, Mr Sunak said.

Recognising that 80 per cent of hospitality firms stopped trading in April and 1.4 million hospitality workers have been furloughed, the Chancellor announced that the rate of VAT applied on most tourism and hospitality-related activities will be cut from 20 per cent to 5 per cent.

“I’ve decided, for the next six months, to cut VAT on food, accommodation and attractions. Eat-in or hot takeaway food from restaurants, cafes and pubs; accommodation in hotels, B&Bs, campsites and caravan sites; attractions like cinemas, theme parks and zoos.

“All these and more will see VAT reduced from next Wednesday until January 12th, from 20 per cent to 5 per cent,” Mr Sunak said.

Together with the government’s new Eat Out to Help Out Scheme, which provides a 50 per cent reduction for sit-down meals across the UK, the VAT cuts are seen to support over 2.4 million staff at over 150,000 businesses.

“This is a £4 billion catalyst for the hospitality and tourism sectors, benefiting over 150,000 businesses, and consumers everywhere – all helping to protect 2.4 million jobs,” said Mr Sunak.

The Chancellor’s plan will also create tens of thousands of jobs through bringing forward work on £8.8 billion of new infrastructure, decarbonisation and maintenance projects.

This includes a £3 billion green investment package that could help support around 140,000 green jobs and upgrade buildings and reduce emissions. 

As part of this package homeowners and landlords in England will be able to apply for vouchers from a £2 billion Green Homes Grant scheme this year to pay for green improvements such as loft, wall and floor insulation that could save some households hundreds of pounds a year on their energy bills while creating thousands of jobs for tradespeople. 

Moreover, a £1 billion programme will make public buildings, including schools and hospitals, greener, helping the country meet its ambitions of achieving Net Zero by 2050. 

"It is an unambiguous choice to make this moment meaningful for our country in a way that transcends the frustration and loss of recent months," Mr Sunak concluded.

"It is a plan to turn our national recovery into millions of stories of personal renewal."