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Chancellor unveils measures to boost economy in Summer Statement

The Chancellor Rishi Sunak has announced a package of measures designed to boost the economy in the wake of the COVID-19 pandemic.

His Summer Statement today (Wednesday) included:

  • A new £2bn scheme to create thousands of job placements for young people, known as the Kickstart Scheme.
  • A temporary change to stamp duty – immediately increasing the threshold to £500,000 and exempting all properties below it until March 31, 2021
  • Temporary six months cut to VAT on food, accommodation and attractions from 20% to 5%
  • A new job retention bonus for employers who bring back furloughed staff, worth £1,000 for every furloughed employee brought back into the workplace until January 2021
  • A £2bn “green homes grant” to help make homes more energy efficient
  • A £2,000 payment to companies to encourage them to hire apprentices, or £1,500 to hire apprentices aged over 25
  • An extra £1bn for the Department of Work and Pensions to help jobkseekers
  • An initiative to pay 50% of a meal out during August to support the hospitality sector, dubbed the ‘Eat Out to Help Out’ scheme

The £2bn Kickstart Scheme will subsidise six-month work placements for people on Universal Credit aged between 16 and 24, who are at risk of long-term unemployment.

The Treasury will pay the wages of thousands of youngsters if firms agree to hire them for six months.

Businesses will have to agree to provide an element of training and it is hoped the placements will lead to permanent jobs.

The Kickstart Scheme, which will run until at least the end of 2021. Participants will receive the minimum wage, paid by the state, to work 25 hours a week. Their employers’ National Insurance and pension contributions will also be paid, while firms will receive an ‘administration fee’ of around £1,000 per employee for arranging the placement.

The Government hopes the scheme will start getting underway next month, with the first placements expected to begin in the autumn. 

Commenting on the Chancellor’s Summer Statement, BCC Director General Dr Adam Marshall, said: “Businesses will celebrate many of the Chancellor’s announcements today, although it is likely that the scale of the stimulus needed to help the UK economy restart, rebuild and renew will need to be greater still over the coming months.

 “Targeted measures to help young people gain work experience and enter the labour market at this challenging time are welcome, and, so too is the focus on a greener recovery and the acceleration of key infrastructure projects. The VAT cut will help firms in the hospitality and tourism sectors working hard to restart after many months of lost revenue.

“Over the coming weeks the Chancellor will also need to address the ticking clock on a number of other key concerns – including the impending end of key business loan schemes, and the unanswered question around what support will be offered to businesses and communities that face local lockdowns.”

BCC Co-Executive Director Claire Walker welcomed the Kickstart Scheme: “It will help firms create and support thousands of opportunities for young people, maintaining their access to the job market and driving the UK’s economic recovery.

“The Chancellor has responded to our calls to prioritise work experience and job opportunities for those entering the world of work at a particularly challenging time. The Chamber network stands ready to work with government on the detail of the scheme to ensure it is successfully delivered on the ground.

“This announcement must form part of a wider plan to boost business confidence and protect livelihoods as we restart, rebuild and renew the UK economy.”

On the temporary VAT cut from 20% to 5% in the hospitality and tourism sectors, BCC Head of Economics Suren Thiru, said: “The Chancellor has listened to our call for a temporary cut in VAT which will kickstart consumer spending in some parts of the economy. This is a welcome step and will help to stimulate a more rapid pickup in activity in those sectors and supply chains hardest hit as the economy gradually reopens.”

But he said the ‘Eat Out to Help Out’ voucher scheme needed to be “bolder” to make any real impact.

much bolder to make a material difference.”

On the Apprenticeship Recovery Package, BCC Head of People Policy Jane Gratton, said: “The Chancellor has listened to our calls for a wage subsidy to help employers create high quality apprenticeships for young people entering the workforce in a difficult year.
“More should be done to support employers, including allowing apprentices to undertake much of the off the job training upfront to give employers more time to recover and ensure apprentices are better prepared to enter the workplace.    

“We still need to see greater flexibility in the apprenticeship levy so that employers can help their people get the skills they need to succeed in an evolving workplace.”

But BCC Co-Executive Director, Hannah Essex, said the Government still needed to consider additional measures in response to the pandemic and its negative impact on business.

She said: “The BCC’s research shows investment intentions have been hit hard during the pandemic, so the Government should be preparing new incentives for business investment in the UK, including extending the £1 million Annual Investment Allowance for a further two years and  broadening its scope to include training, the transition to net zero and spending on making workplaces COVID-secure.

“Businesses face cliff-edges in the autumn as existing support winds down, and so the Government must consider reducing national insurance contributions and extending existing loan schemes. 

“Many businesses are concerned about how they will survive in the event of a local lockdown, and we ask the Government to urgently set out what support will be available if that happens.”

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