In a Summer Statement Mr Sunak said the UK economy had shrunk by 25% during the Covid-19 pandemic and the Bank of England was forecasting major job losses this year unless help was provided.
To boost job creation and job retention he revealed in the House of Commons today a swathe of job creation and job retention measures plus a temporary VAT cut for hospitality businesses to encourage customers to return, plus a temporary cut in property stamp duty.
Mr Sunak said the withdrawal of the job furlough scheme would go ahead as planned but he accepted this would be a difficult transition for many firms and support was needed.
Among the key job measures he announced to MPs were:
• A Job Retention Bonus to help firms keep furloughed workers. UK Employers will get a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021.
• A new £2 billion 'Kickstart' Scheme will be launched to create hundreds of thousands of "new, fully subsidised jobs" for young people across the country. Those aged 16-24, claiming Universal Credit and at risk of long-term unemployment, will be eligible. Funding for each six-month job placement will cover 100% of the National Minimum Wage for 25 hours a week – and employers will be able to top this wage up.
• A total of £1.6bn will be invested in 'scaling up' employment support schemes, training and apprenticeships to help people looking for a job.
- Businesses will be given £2,000 for each new apprentice they hire under the age of 25. This is in addition to the existing £1,000 payment the Government already provides for new 16-18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan.
- A £111 million investment to triple the scale of traineeships in 2020-21 ensuring more young people have access to high quality training.
- £17 million of funding to triple the number of sector-based work academy placements in 2020-21
- Nearly £900 million to double the number of work coaches to 27,000;
- Over a quarter of a million more young people to benefit from an extra £32 million investment in the National Careers Service.)
The Chancellor also surprised many with a temporary six month cut in VAT from 20% to 5% for the hospitality and tourism sectors which will make hotel stays and eating out cheaper, however he resisted extending the VAT cut to other sectors.
To encourage people to return to eating out at restaurants the Government’s new 'Eat Out to Help Out' discount scheme will provide a 50% reduction for sit-down meals in cafes, restaurants and pubs from Monday to Wednesday every week throughout August.
To help home movers there will be a temporary increase to the Nil Rate Band of Residential SDLT (Stamp Duty) from £125,000 to £500,000 until 31 March 2021.
And there will also be more investment in infrastructure projects across the UK including ‘green’ jobs and vouchers of up to £5,000 for energy-saving green home improvements.
The Chancellor said further measures would be announced in his autumn statement later in the year.