The Chancellor has this afternoon given a summer statement to the House of Commons on the government’s economic response to Covid-19.
He said the government was moving the country through three phases, and it was entering the second phase with a ‘plan for jobs’. The third phase, which will focus on the ‘plan to rebuild’, will come in the autumn through a Budget and Spending Review.
He noted that public finances would have to be put on a sustainable footing in the medium term, but he would not accept mass unemployment as unavoidable. This was outlined in the context of the IMF expecting the deepest global recession since records began, the OBR predicting significant increases in unemployment and the economy having contracted by 25% in just two months – the same amount it grew in the previous 18 years.
He confirmed the furlough scheme would be wound down flexibly and gradually, continuing until October, as measures were introduced to support, create and protect jobs.
On supporting jobs, he announced:
- A £111 million investment to triple the scale of traineeships in 2020-21 ensuring more young people have access to high quality training.
- Business will be paid £2000 for new apprenticeship places. There will also be a new bonus for businesses to hire apprentices aged 25 and over, with a payment of £1,500.
- £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.
On creating new jobs, he announced:
- A new jobs scheme to support young people – employers will be paid to create new jobs for any 16 to 24-year-old at risk of long-term unemployment and must be paid National Minimum Wage with a minimum of 25 hours per week. Initial £2bn will be made available to pay for what will be called the “Kickstart Scheme” and there will be no cap on the number of places available.
- £1.5 billion for hospital maintenance and upgrades.
- £100 million for our local roads network.
- Over £1 billion to start to rebuild schools in the worst condition in England, plus £760 million this year for key maintenance work on schools and FE colleges.
- £1 billion for local projects to boost local economic recovery in the places that need it most.
- £142 million for court maintenance to repair around 100 courts across England.
On protecting jobs, he announced:
- The furlough scheme will “wind down, flexibly and gradually, supporting businesses and people throughout October.”
- £1000 bonus for every employee brought back from furlough – provided they continue to employ them to January and paid at least £520 in each month from November to January.
- VAT cut for some sectors from 20% to 5% – for the next six months, from next Wednesday, VAT will be cut on food, accommodation and attractions.
- £10 per person discount as part of ‘Eat Out to Help Out’ scheme – in August, meals eaten out at participating businesses from Monday to Wednesday will be 50% off, up to a maximum discount of £10 per head, including children.
The Summer Statement will be followed by an Budget, expected in October or November.