Chancellor Rishi Sunak announced a 'mini-budget' that includes a bonus scheme for employers who bring furloughed staff or those sent on leave back to work as part of a major drive to save jobs hit by the shutdown induced by the coronavirus pandemic. As part of his summer economic update in parliament, dubbed a mini-Budget, the Indian-origin finance minister also unveiled a new 2 billion pound scheme to create “hundreds of thousands” of new, fully subsidised jobs for young people across the UK, with the overall package of measures estimated at around 30 billion pounds.
“Our plan has a clear goal: to protect, support and create jobs. It will give businesses the confidence to retain and hire; to create jobs in every part of our country; to give young people a better start; to give people everywhere the opportunity of a fresh start,” said Sunak. As the UK enters what it categorises as the second phase in its Covid-19 recovery with the lockdown measures being eased up, Sunak’s so-called “plan for jobs” is designed to support jobs by focussing on skills; create jobs with investment in “shovel-ready” projects; and protect jobs through a VAT cut for the hospitality sector.
The rate on most tourism and hospitality-related activities will be cut from 20 per cent to 5 per cent, which is expected to save households around 160 pounds per year on average. For the sector, he has also unveiled a “landmark” Eat Out to Help Out discount scheme to encourage diners to go back into restaurants and hotels. It will provide a 50 per cent reduction for sit-down meals in cafes, restaurants and pubs across the UK from Monday to Wednesday every week throughout August 2020.
Together with the VAT cut and this scheme, he hopes to support over 2.4 million staff at over 150,000 businesses, helping them recover and reopen after the Covid-19 lockdown. “This will give these businesses the confidence to maintain their staff, as more people get through the door and business activity kick-starts again,” he said.
Warning against closure of furlough scheme
The employment experts and business chiefs warned that the closure of furlough scheme and offering £1,000 bonuses to firms to keep their staff on will not help to prevent the rising unemployment among the people. The furlough scheme was introduced to preventing mass unemployment as the coronavirus struck, 9.4m jobs have been furloughed by 1.1m businesses since March, costing the exchequer £27.4bn so far. The scheme, which is due to end by the the end of October, pays 80% of workers’ wages up to £2,500 per month. Sunak said if the firms kept all of its furloughed staff and applied for the bonus, it would cost the Treasury £9.4bn.
Peter Cheese, the chief executive of the Chartered Institute of Personnel and Development, said extending the furlough scheme beyond October and providing support for companies such as hospitality and leisure, would have had a bigger impact. Jonathan Geldart, the director general of the Institute of Directors, said: “The bonus offers something of an off-ramp from the furlough scheme, and firms will certainly be doing all they can to keep people on board. However, with cash so tight now, January may feel like a long way off for some businesses.”
Labour, trade unions and business leaders had been calling on Sunak to extend the furlough scheme beyond October, as well as to offer more support through the scheme to hospitality firms which have been among the hardest hit by the coronavirus lockdown.
