Sunak unveils “bold and decisive” VAT cut and Furlough bonus scheme
The Chancellor Rishi Sunak says the hospitality sector has been particularly badly hit and announces a Temporary cut to VAT on food, accommodation, and attractions from 20 per cent to 5 per cent from next Wednesday until January 12th, 2021. He also announced a new job retention bonus for employers to bring back furloughed staff, as businesses will be paid a £1, 000 bonus for every furloughed employee they bring back to work and the bonus would apply to employees paid enough to reach the lower earnings limit for paying national insurance. He also announced similar incentives for companies to train and hire apprentices “We’ll pay businesses to hire young apprentices, with a new payment of £2, 000, and we’ll introduce a brand new bonus for businesses to hire apprentices aged 25 and over, with a payment of £1, 500.
Rishi Sunak pumped another £30bn into the economy yesterday since the pandemic now dwarfs last year’s health spending. He plans to spend up to £188.7bn on tackling the immediate crisis and nursing the economy through the job-saving package of tax breaks, consumer discounts and wage subsidies equates to 9.4 per cent of GDP
He told the Commons in an emergency statement on Wednesday afternoon “ If you’re an employer and you bring back someone who was furloughed and continuously employ them through to January- we’ll pay you a £ 1, 000 bonus per employee. It is vital people aren’t just returning for the sake of it – they need to be doing decent work. So for businesses to get the bonus, the employee must be paid at least £520 on average each month from November to the end of January – the equivalent of the lower earnings limit in national insurance. Our message to business is clear: If you stand by your workers, we will stand by you,” Mr. Sunak said the policy would cost £9billion if all employers took full advantage of the scheme.
The chancellor announces a temporary change to stamp duty –immediately increasing the threshold to £500, 000.
The chancellor to include a new £2bn scheme to create thousands of job replacements for young people.
He says the UK has decarbonised its economy faster than “ almost any European country” and will “make no apology” for winding down the government’s furlough scheme for subsidising worker wages but says ministers remain committed to protecting jobs- including through the job bonus scheme announced earlier.
Rishi Sunak announces the government will give everyone 50 per cent off meals in participating restaurants during August. The discount will go up to £10 per head for adults and children and apply Monday to Wednesday which will help people “ Eat Out to Help Out” the hospitality sector.
Sunak says the government is targeting support at the “most vulnerable”. He says social distancing requirements have impacted the consumption-driven UK economy “ more than others” and the government action has been “ bold and decisive”.
The Treasury document reveals an allocation of £50bn to public services, of which an astonishing £15m to buy PPE for staff and another £10bn allocated to testing and tracing.