Chancellor of the Exchequer Rishi Sunak has outlined plans to support job creation and retention in the wake of coronavirus, with tax cuts to bolster housing and hospitality.
Speaking in the Commons, he unveiled cuts to stamp duty, VAT reductions for hospitality, and more than £3bn in funding to support green infrastructure.
Sunak said: “Today we act with a plan for jobs. Our plan has a clear goal, to protect, support and create jobs.”
Help for homeowners
“One of the most important sectors for job creation is housing,” he added.
The chancellor has increased the threshold for stamp duty taxes from £125,000 to £500,000, effective immediately until 31 March next year. He said the move would “catalyse the housing market and boost confidence”.
The cut has been welcomed by housebuilders, agents and RICS, which has long-called for the stamp duty holiday. Though support for renters was noticeably missing, along with clarity on extensions for Help to Buy which expires in March 2021, and March 2023 for first-time buyers.
Redrow chief executive Matthew Pratt said: “Stamp duty is just one barrier. Despite the home building industry coming to a standstill for the best part of the last three months, the Help to Buy clock has kept ticking towards the deadline.”
Sunak also confirmed plans for a £2bn Green Homes Grant, with households able to apply for vouchers of up to £5,000, or £10,000 for low income families, to make homes energy efficient.
A further £1bn fund will go to improving the energy efficiency of public sector buildings, with a £50m pilot to test the right approach to decarbonise social housing. Together these initiatives aim to make more than 650,000 homes more energy efficient.
Julie Hirigoyen, chief executive at the UK Green Buildings Council, said: “This funding needs to be part of a comprehensive plan to improve the whole of the UK’s building stock, creating tens of thousands of jobs for the long term, not here-today-gone-tomorrow.”
She called for policy to grow business confidence and skills to grow capacity to retrofit buildings and action to boost long-term consumer demand for green home upgrades.
Hospitality and tourism
Sunak acknowledged hospitality and tourism as the sectors “hardest hit” during the pandemic.
“The best jobs programme we can do is to restart these sectors and get our pubs, restaurants, cafes and B&Bs bustling again,” he said.
The chancellor revealed two measures to support these industries. VAT will be reduced from 20% to 5% from next Wednesday 15 July until 12 January next year, helping more than 150,000 businesses in food, accommodation and attractions.
Sunak aims to boost demand for businesses with eat-out vouchers for £10 discounts per head per meal in August.
He added: “We need to give these businesses the confidence to know that if they open up, invest in making their premises safe, and protect jobs, demand will be there.”
Melanie Leech, chief executive at the British Property Federation, said: “The chancellor could have gone further and provided a reduction in stamp duty land tax for property transactions on our high street to incentivise investors to provide the capital required to support the creativity for the re-purposing and reinvention of our high streets.
“I am disappointed that the chancellor did not use today as an opportunity to announce business rates reform, to give businesses confidence in the long term.” She said downwards phasing with rates based on 2010 valuations should be “abolished immediately” and called for a “fairer and more sustainable” system.
Job retention
The focus on jobs includes moves to replace furlough scheme with a Jobs Retention Bonus initiative from October, paying businesses £1,000 per employee returned to work.
Sunak said if employers bring back all furlough staff the incentive would result in a £9bn spend to retain these workers, with a further £1bn going to the Department of Work & Pensions to support unemployed people.
He unveiled a Kick Starter scheme with an initial £2bn to pay for new jobs for young people, a trainee shift scheme with a £100m dedicated to engineering, construction and social care, and increased funds for apprenticeships.
Walter Boettcher, Colliers’ head of research and economics, said the jobs schemes “will not prop up the workforce as the furlough scheme has done so far”.
“The real question remains as to whether the timing of the existing furloughing scheme will align with the incipient economic recovery. Given that a vaccine, according to press reports, may become available in October, that could be a definitive month in shaping the UK’s recovery.”
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