After todays PMQ’s Mr. Sunak rose in the house for the umpteenth time during the Coronavirus pandemic, and when he rises millions of business owners and leaders hold their breath and listen. What is beyond doubt is the the scale of the challenge faced. It is broadly accepted that unemployment will top 3m shortly and it is a fact that the economy has shrunk 25% in the past three months. So what did he say about helping the bouceback, and how will it benefit businesses? My comments in italic.

“It’s all about jobs, jobs, jobs”

The CJRS and SEISS

IMG_4819Neither of these schemes have been extended beyond any previous announcements with them winding down from next month, but there was a job retention bonus of £1000 announced for businesses bringing back their furloughed staff. This bonus will be paid for every member of staff brought off furlough, and retained in the business until at least the end of January and is subject to a minimum level of earnings for that period.

“An excellent windfall to help cover the costs of returning members of staff to business. Although it won’t protect all jobs it will help businesses balance gaps between income and outgoings and cushion the blow.”

Kickstart Scheme

IMG_4818Supporting the job opportunities for younger employees. Businesses that create new jobs for staff aged 16-25 will get their wages subsidised by up to 100% for the first six months. The employees needs to be already on universal credit and deemed at risk of long term unemployment.  The subsidy will cover 100% of the national minimum wage.

“Interesting scheme, no business is going to dislike a member of staff free for six months, but this limits the scope of applicants and negatively prejudices candidates over 25, not already unemployed. Also sounds to me like something easy to explain in Parliament, less easy to put into practice in smaller businesses.” 

Employing Apprentices 

IMG_4817

Designed to support the employment of apprentices (and expand the overall number) the announced incentive of £2,000 today appears to be an additional benefit to the already subsidised wage costs and £1,000 payment, and for the first time includes those over 25. (£1,500). The window for employing the apprentice is from 1st August 2020 to 31st January 2021

“For businesses that already employ apprentices and have the infrastructure and time to support this I suspect this will be welcome of course. The challenge is for smaller businesses integrating an apprenticeship program will be time consuming and costly and I don’t think many micro businesses will be able to benefit from this at all.”

Sector specific support hospitality and tourism

IMG_4815There are few that would argue that this sector has been the hardest hit with pubs and restaurants only opening now, and if you have read my short article on the sector challenges you’ understand why. This sector has seen some real TLC from Mr. Sunak today with several offers in addition to eh above, all of which apply.

Firstly VAT for the sector has been reduced to 5% for food and non-alcoholic drinks. This will remain in place from July 15th to January 12th 2021. This VAT cost extends to accommodation such as hotels and B&B’s and to attractions such as parks and zoos.

“Sector specific support is something I favour. I’m expecting to see a clamouring of people claiming this may not get passed on to the consumer but I think market competition will sort that out.I know every £1 added to the cost of a meal in most pubs and restaurants gets scrutinised by the playing public so would expect to see these market forces dictate that it is in majority. This could be a big stimulus for a market that needs it. Bit short term though.”

IMG_4813The sector has seen a second incentive scheme. All households can look forward to a “Dish on Rish” (all my own work) where 50% of your meal out will be covered up to £10 per person including children. These are valid at participating sites only and can be spent on non-alcoholic drinks and eat-in food. Fear not about the venues income. They claim it back on a helpful website and received the funds within 5 days. Available for August only.

“In my book another winner. This will create a rush of people eating out for 4-5 weeks which Mr. Sunak will hope will become a habit thereafter, but without his subsidy. My obvious concern here is whether the sector can handle to demand in that short a period with the new socially distant layouts”

That wasn’t the end of the announcement. Stamp duty threshold increase to £500,000, green energy incentives including grants for households for up to 2/3 of entry saving investments such as solar or home insulation and there are more announcements that didn’t make it into the speech. Much more detail on the above and this can be found here.