Chancellor Rishi Sunak is to lay out his latest Covid-19 economic package on Wednesday, this time aimed at boosting the country’s recovery from the pandemic.
Mr Sunak is expected to make announcements regarding a new youth employment scheme and a £3bn green package including grants for homeowners when he delivers his summer economic update to the House of Commons.
He is also rumoured to be considering raising the threshold for stamp duty payments, as he faces pressure to assist those who are most at risk from a financial crisis.
However his main policy announcement is anticipated to be the creation of a £2bn scheme aimed at alleviating youth unemployment by subsidising work placements.
A three-point plan to boost the ailing economy by helping job creation will include a plan to help pay for six-month placements for some young people facing long-term unemployment.
The Treasury acknowledged that young people are more likely to be furloughed under the job retention scheme which is being wound up and is due to end in October, as PA reports.
So a “kickstart scheme” hoped by the Treasury to create hundreds of thousands of jobs will be unveiled for 16 to 24-year-olds claiming Universal Credit and at risk of long-term employment.
Government funding would cover 100% of the minimum wage for 25 hours a week across Great Britain, with bosses able to top up wages.
Ahead of the announcement, Mr Sunak said: “Young people bear the brunt of most economic crises, but they are at particular risk this time because they work in the sectors disproportionately hit by the pandemic.
“We also know that youth unemployment has a long-term impact on jobs and wages and we don’t want to see that happen to this generation.
“So we’ve got a bold plan to protect, support and create jobs – a plan for jobs.”
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Labour’s shadow chancellor Anneliese Dodds said the Government is “yet to rise to the scale of the unemployment crisis” and said the priority should be to abandon its “one-size-fits-all” approach to ending the job retention and self-employment schemes.
“In addition, older people who become unemployed, and those living in particularly hard-hit areas, will also need tailored support,” she added.
However, the general secretary of the Trades Union Congress, Frances O’Grady, welcomed the measure as a “good first step” to prevent mass youth unemployment.
“But we’ll be checking the small print to ensure every job provides proper training and a bridge to steady employment,” she added.
Confederation of British Industry director-general Dame Carolyn Fairbairn said the plan “will be a much-needed down payment in young people’s futures”.
“By investing in skills, the Government can lessen the potential scarring impact of the pandemic for the next generation,” she added.
British Chambers of Commerce’s co-executive director Claire Walker also reacted to the news, saying: “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.”
The other measures expected to be announced by Mr Sunak:
Among the job measures already announced are a £111 million scheme for firms in England to get a £1,000 bonus if they offer unpaid traineeships.
Mr Sunak will also detail a £3 billion green package with grants for homeowners and public buildings to improve energy efficiency.
It will include £2 billion for households to insulate their homes and make them more energy-efficient, but campaigners said the funding pales in comparison to the economic and environmental crises.
There has also been speculation that Mr Sunak will raise the threshold for stamp duty payment for property sales where it applies in England and Northern Ireland from £125,000 to £500,000.
But housing market experts have argued home-buyers in southern England will stand to benefit the most from the move.
Mr Sunak has also been urged to consider an emergency VAT cut to stimulate consumer spending.
What business leaders are calling for
On Tuesday, business leaders have laid out their demands ahead of Mr Sunak’s speech.
Private sector lobbying group Downtown in Business (DIB) has urged him to be bold and deliver an ambitious plan to get the UK economy back on the road to recovery – warning him against delaying key actions until the autumn.
Speculation suggests Rishi Sunak will use his announcement to preview actions he intends to take later in the year.
DIB’s Frank McKenna, said: “Sunak must act now.
“The economy has shrunk by more than 20%. Businesses are already making redundancies with thousands of job losses.
“Delaying implementation of positive measures, that can mitigate against further hits to business, would be a mistake – we don’t want jam tomorrow.
“Business was underwhelmed by the Prime Minister’s £5billion, so-called FDR, package last week. We need some bold action from the Chancellor to restore industry confidence. I hope we don’t see a damp squib – Sunak has got to come up with the goods.”
He has issued a 30-point manifesto that includes zero VAT for the hospitality sector, tax breaks for business, “beefing up” the Enterprise Allowance Scheme and affording greater devolution to mayors and combined authorities.
He added: “These measures should be introduced with immediate effect. Another quarter of limbo, leaving companies in a zombie-like state, can only do further damage to the fragile confidence of British businesses.”
Mark Malone, partner at Begbies Traynor in Birmingham, said: “With the threat of increasing unemployment in the region looming, West Midlands businesses will be hoping for further substantial measures from the Chancellor to help restore confidence.
“In particular, businesses will be looking for any extra help they can get with reducing cashflow pressures, such as any further tax reliefs and perhaps additional support around business rates.”
Sarah Walker-Smith, CEO at Shakespeare Martineau, said it was about time “we start to look at economic policy differently”.
She explained: “Macro-economic policy viewed through today’s lens feels like using a sledgehammer to put a pin into a cushion. We need a new type of economic response from the Government this week.
“The Bank of England will and should consider further support for investment, such as additional quantitative easing, but broad-brush policies which affect the entire economy in the same way at the same time, will not work in the situation ahead of us.
“The Government must respond in a way which sits between macro and micro-economic policy.
“We need a set of interventions that focus on a regional and sector-based economic agenda – which isn’t just about injections of cash but where policy can be altered to really add value to a specific sector or geography. We know some sectors are thriving in the current climate and others are paralysed and are going to suffer permanent scarring.
“Sector-specific policy and schemes for the likes of transport, travel, hospitality, entertainment and leisure to name a few, will be crucial. For example, we need to see existing schemes around finance and job retention support extended and made relevant to the minutiae of those sectors.
“Further regional devolution will also be vital to survival and bounceback.
“The regions are in desperate need of government support, but the decision making around how resources are used must be made locally to have lasting and meaningful impact.”
A survey of business leaders in the North West also expressed a “clear wish” to see business rates replaced with an online sales tax similar to the digital services tax.
A poll by accountancy and advisory firm BDO LLP indicated that with businesses moving more towards online trading, a trend that has increased during Covid-19, much-needed revenue should be raised by taxing online sales.
Opinions were divided on how the government could support the younger generation likely to bear the brunt of the post-Covid debt, with over one in three (36%) hoping that Inheritance Tax (IHT) will be simplified to help the older generations pass on their wealth.
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The priority for over one in four (29%) would be to build more affordable homes for first-time buyers. In contrast, less than one in five (17%) said that nothing should be done to support the younger generations.
Ed Dwan, head of BDO LLP in the North West, said: “Business leaders are focused on the future and while the majority believes boosting business and jobs should be a top priority, from a personal tax perspective, this survey shows that many are concerned about the impact of Covid-19 on younger generations.
“Respondents are calling for IHT to be simplified to enable succession planning, or to see a sharp increase in house building to help first time buyers.”
On Tuesday, BusinessLive reported on calls for the Chancellor to announce a new support package worth tens of billions of pounds for “forgotten” freelancers who had been “left to rot”.
They are those who have fallen between the requirements for initiatives such as the Job Retention Scheme and the Self Employment Income Support Scheme (SEISS) – and who earn via the PAYE (Pay As You Earn) system.
Forgotten PAYE was set up to represent an estimated 1.7m “forgotten” freelancers, and is now demanding that Mr Sunak make amends by announcing a support package worth tens of billions of pounds for this group and others.
Speaking ahead of Mr Sunak’s statement, Forgotten PAYE’s spokeswoman, presenter and showbiz reporter Ellie Phillips, told BusinessLive: “The dream would be that they announce a new support package for all of those who have been excluded or for those who’ve not had adequate support that brings it into line with what other tax payers have had.
“This must mean they are given – not loaned – the same amount of backdated support others have had. We want those funds to be granted immediately. That’s how urgent the situation is.”
Roger Marsh OBE DL, chair the NP11 and Leeds City Region Enterprise Partnership, said it was time for the Government to “double down” on its commitment to levelling-up.
He said: “The Brownfield Land Fund makes for a very good start, with the lion’s share coming to the regions to support the building of thousands of new homes.
“We’ve seen the effects of coronavirus hit every part of the economy hard but the North remains especially vulnerable. Yet across many leading areas, it holds huge potential for relatively low levels of investment.
“The key point to make is that a distinctly regional response will be necessary for the UK to ‘build back better’ and to make full use of the structures and relationships that Local Enterprise Partnerships and devolved authorities have worked hard to establish.
“For the North, this means making levelling-up a formal treasury objective, giving localities the tools and funding needed, and future-proofing the transformational potential of our clean growth, exports, and innovation opportunities.”