Helpful Guide to the Summer Economic Statement – What’s New

Hodge Research Group’s Coronavirus Impact Survey Responses

The Chancellor has introduced a series of measures focused in some key areas that have been hard hit due to Covid-19. 

In what the Chancellor referred to as ‘Phase 2’ of the Government’s response, Rishi Sunak announced a number of measures of support including:

  • A Job Retention Bonus;
  • A Kickstart Jobs Scheme;
  • Trainee and Apprentice Bonus Schemes;
  • Green Homes Grants;
  • A Stamp Duty Cut;
  • A VAT Reduction for the hospitality and tourism sector; and
  • An ‘Eat Out to Help Out’ Scheme.

Phase 2 is all about bridging the gap as we move from the severe and sudden impact of Covid-19 that lead to lockdown and look to transition back to a ‘new normal’.  Phase 3, which will focus on ‘Rebuilding’ is due to come in the Autumn Budget.

With this ‘Summer Economic Statement’ and measures, the Chancellor is looking to:

  • Support, create and protect jobs (thus helping businesses and individuals);
  • Boost the property market;
  • Encourage energy efficiency in homes; and
  • Support the ailing hospitality and tourism industry.

The measures introduced today are broadly welcome.  Anything that can help protect, create and support jobs, plus specific measures to help some sectors and to encourage energy efficiency are clearly positive.  However, there is no doubt that these measures will not go far enough for some.

Only time will tell whether these measures will have the desired impact and whether they will inject activity in the areas they are targeting.

The measures also pose some questions, including:

  • Will the hospitality sector pass on the VAT reduction to the end consumer?
  • Will consumers feel safe enough to visit hospitality and leisure attractions to benefit from the 50% discount offered in the ‘Eat Out to Help Out’ scheme?
  • Is it too late for those staff that have already been made redundant or for those businesses that cannot continue to trade due to the devastating impact already?

The impact of these measures will affect many SMEs.  If you have furloughed staff, whilst the promise of a £1,000 bonus may not be enough for you to keep on all your furloughed staff, where the case is marginal, this bonus may be enough to tip the balance in favour of keeping the jobs.

Graham Paul Accountants have produced a helpful guide that summarises the key schemes.  You can download a copy here