Peter Disney of Colchester-based accountancy firm, Wood and Disney, offers his view on the Chancellor’s measures yesterday to boost the economy.
The Job Retention Bonus
Employers who retain furloughed workers as employees up to 31st January 2021 will receive a one-off bonus of £1,000 per retained employee.
Employees must remain continuously employed during this period.
Employees must earn on average above the Lower Earnings Limit (£520 per month) between the end of the Coronavirus Job Retention Scheme and 31st January 2021.
Payments will be made in February 2021.
Peter Disney: In reality this is, in my opinion, a waste of resources. If you need to pay an employee more than £520 per month for the next seven months then £1,000 will not convince you to retain anyone. So the likelihood is that if an employer has retained an employee they needed them anyway so probably don’t need this £1000.
The Kickstart Scheme
Employers will receive funding of up to 100% of the National Minimum Wage from the Government for each employee (aged 16-24) covering a maximum of 25 hours a week.
The Government will also cover the relevant employers National Insurance costs.
The Government will also cover the relevant employer automatic enrolment pension scheme contributions.
The individual must be on Universal Credit and deemed to be at risk of long-term unemployment.
The funding will be for each 6-month job placement.
The employer can top up the wages if they so wish.
Peter Disney: This is a good start to help those youngsters struggling to find work right now and gives employers a risk free way to assess a potential employee but doesn’t guarantee that there will be a job at the end of the process. Many very small businesses will perhaps be more concerned with their own productivity and efficiency and may not want the distraction of someone requiring help and attention.
Employment Support Schemes, Training and Apprenticeships
Businesses will be given £2,000 for each new apprentice hired under the age of 25 and £1,500 for those 25 years old and over.
This covers the period from 1st August 2020 to 31st January 2021.
This is in addition to the £1,000 Government payments already provided under the Education, Health and Care Plan.
Extra investment to go into traineeships, sector-based work academy placements, work coaches and the National Careers Service.
Peter Disney: More support for apprenticeships is essential for the future growth of the UK economy. Training and education is absolutely essential for the UK to remain competitive in an ever shrinking world.
Tourism and Hospitality Sectors
VAT rate cut from 20% to 5% on most tourism and hospitality related activities.
This will apply from 15th July 2020 to 12th January 2021.
The 5% VAT rate will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK.
The reduced (5%) rate of VAT will apply to supplies of accommodation and admission to attractions across the UK.
‘Eat out to help’ (EOH) discount scheme will cover days Monday to Wednesday in August.
The EOH scheme will provide a 50% discount for sit down meals up to £10 per head.
Cafes, pubs and restaurants and other eligible food service establishments will need to register for the EOH Scheme in order to make a claim.
Peter Disney: I fully appreciate that the hospitality sector has suffered massively during this lockdown but surely the larger more profitable fast food outlets are not suffering as much as small independents and will use these cuts to further improve their competitive position. Consumers will expect price cuts whereas the smaller independents need this potential increased profitability to cover for the fact that they will have to serve fewer customers yet pay for the same overheads.
Stamp Duty Land Tax (SDLT)
There is a temporary increase to the Residential SDLT nil rate band from £125,000 to £500,000 in respect of residential property purchases in England and Northern Ireland.
This runs from 8th July up to and including 31st March 2021.
Pter Disney: Not convinced this is needed as many of my clients in the building industry are busier than ever and I understand new house builders are still selling. I am all for supporting the economy but these giveaways will need to be paid for and therefore should be very carefully thought through.
A Green Recovery Package
A Green Homes Grant (GHG) providing at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household.
For those on the lowest incomes, the GHG scheme will fully fund energy efficiency measures of up to £10,000 per household.
The government will invest up to £40 million in a Green Jobs Challenge Fund for environmental charities and public authorities.
Peter Disney: I personally approve of any form of support for green initiatives although it still shocks me that there are still homes in the UK without adequate insulation.
£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
Peter Disney: I wonder how much of this money is spent with smaller UK companies. Probably relatively little.