Firms which have furloughed staff will be given a £1,000 bonus to keep workers in jobs, diners will get a discount to support pubs and restaurants, and stamp duty is to be cut under plans to protect the economy from the coronavirus recession.
Chancellor Rishi Sunak said the jobs retention bonus could cost up to £9 billion if all furloughed workers are retained.
He unveiled the measure as part of an emergency package of support to help keep people in work as the coronavirus economic crisis hits.
He warned that “hardship lies ahead”, but insisted that no-one will be left “without hope”.
Unveiling announcements in a “plan for jobs” which could cost up to £30 billion, Mr Sunak also:
– Confirmed plans to abolish stamp duty on properties up to £500,000 in England and Northern Ireland under a temporary measure lasting until March 31 2021.
– Announced an “eat out to help out” plan for dining out in August to boost the hospitality sector, with a 50% discount per head from Monday to Wednesday up to a maximum discount of £10 per diner.
– Slashed VAT on food, accommodation and attractions from 20% to 5% from July 15 until January 12, a tax cut worth up to £4 billion.
– Set out a scheme for firms to be given £2,000 for each new apprentice they hire under the age of 25 and a new bonus of £1,500 for apprentices over that age.
The furlough scheme winds down in October, and Mr Sunak is acting in an attempt to avoid widespread redundancies as state support is withdrawn.
“While we can’t protect every job, one of the most important things we can do to prevent unemployment is to get as many people as possible from furlough back to their jobs,” he said.
Under the Jobs Retention Bonus, firms will be paid £1,000 for each employee they bring back from furlough and continuously employ through to January on an average of at least £520 a month.
“We’ll pay the bonus for all furloughed employees,” he said.
“So if employers bring back all nine million people who have been on furlough, this would be a £9 billion policy to retain people in work.
“Our message to business is clear: if you stand by your workers, we will stand by you.”
The Chancellor, in what amounted to a mini-Budget, told MPs that the Government will do “all we can” to keep people in work.
Addressing MPs, Mr Sunak said his plan would help protect livelihoods after the economy contracted by 25% in just two months.
He said: “We have taken decisive action to protect our economy.
“But people are anxious about losing their jobs, about unemployment rising. We’re not just going to accept this.
“People need to know we will do all we can to give everyone the opportunity of good and secure work.
“People need to know that although hardship lies ahead, no-one will be left without hope.”
Other measures announced by Mr Sunak include:
– A £2 billion scheme of taxpayer-funded work placements for 16 to 24-year-olds on Universal Credit and at risk of long-term unemployment.
– A £3 billion green package, with grants for home-owners and public buildings to improve energy efficiency.
– A £111 million programme of unpaid traineeships combining work experience with training.
The Chancellor’s statement comes after warnings from the Organisation for Economic Co-operation and Development (OECD) that the UK’s unemployment rate could soar to 14.8%, with job losses comparable to the 1930s.
Mr Sunak said the Office for Budget Responsibility and Bank of England are both projecting “significant job losses”.
That was “the most urgent challenge we now face” but “I will never accept unemployment as an unavoidable outcome”, Mr Sunak said.
Shadow chancellor Anneliese Dodds welcomed the support for the economy but stressed that more needs to be done to control the virus.
“The best the Government can do to boost demand is to give consumers and workers the confidence and psychological security that they can go out to work, to shop, and to socialise in safety,” she said.
CBI director-general Dame Carolyn Fairbairn said the Chancellor had been right to prioritise jobs but said more immediate support for firms is required.
“Many viable firms are facing maximum jeopardy right now,” she said. “The job retention bonus will help firms protect jobs.
“But with nearly 70% of firms running low on cash, and three in four reporting lack of demand, more immediate direct support for firms, from grants to further business rates relief, is still urgently needed.”
The potential £30 billion of extra spending comes on top of almost £160 billion already committed to dealing with the coronavirus emergency, a figure far higher than previously estimated, and there is little indication of how Mr Sunak intends to pay for it.
Institute for Fiscal Studies deputy director Carl Emmerson said the measures are likely to push the deficit further above £300 billion “which would be easily the highest as a share of national income since the Second World War”.
“What matters more for the public finances will be the extent to which the economy manages to bounce-back strongly,” he said.
“If, as is likely, the economy does not fully recover then future fiscal events are likely to involve a less pleasant set of announcements over the extent to which taxes need to rise to restore the health of the public finances.”