Rishi’s Recovery Plan
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Chancellor of the Exchequer, Rishi Sunak, has unveiled his recovery package worth £30bn in an attempt to revitalise the UK’s battered economy which has shrunk by a whopping 20.4% as a result of the COVID-19 crisis. This devastating economic contraction has effectively seen the UK economy lose its last 18 years of growth, catapulting the UK into its worst recession in over 250 years.
Sunak’s extensive package comprises a wide array of initiatives and fiscal modifications with the overall objective of retaining jobs and returning consumers to the highstreets. One of the most significant elements of the plan was the announcement of a new Jobs Retention Bonus in which the Government has vowed to pay businesses £1,000 for every furloughed employee that they keep on up until January 2021. For businesses to qualify for this pay-out, the relevant employee must earn the lower-earning limit for national insurance (£520 per month) between November and January. This scheme could cost the Government up to £9bn if every business was to take advantage of it. Mr Sunak introduced this scheme by stating “Our message is clear to businesses; if you stand by your workers, we will stand by you”. This bonus has been welcomed by many businesses, with Employment Partner at Baker McKenzie stating that the scheme was a “welcome and surprising development” but stressed that urgent guidance would be needed on how it would work.
Additionally, a new “Eat out to help out” scheme was revealed which offers customers up to £10 off their meals per head if they out from Monday to Wednesday. This 50% discount will apply to all participating cafes, restaurants and pubs across the UK throughout August however, it does not extend to alcoholic beverages. Mr Sunak added that this scheme was aimed at getting customers back into restaurants, cafes and pubs” and protecting “the 1.8million people who work in them”. Participating businesses will be able to claim the money back at the end of each week throughout August and receive payment within five working days. Public response to this scheme has been divided; receiving substantial criticism from many who question the effectiveness in the subsidisation of meals amidst a crisis in which many people are still dying every day.
Other major strategies from the Government included a cut in VAT from 20% to 5% for the next sixth months, a £2bn ‘kickstart’ scheme to spark jobs for 16-24year olds until January 2021 and the threshold stamp duty will rise from £125,000 to £500,000 on residential property until the 31st of March.
This economic recovery plan has faced widespread hostility from various critics who all agree that the scale of what the government proposes falls far short of what is required to rebuild the UK economy. Such critics include London Mayor, Sadiq Khan who has declared that the £1,000 Job Retention Bonus isn’t enough for employers and fears that we are about to enter a period of mass unemployment. Despite such criticism, the Chancellor has stated that this will not be the last of the Government’s economic assistance and there will be more to come. The hope for this plan is that it succeeds in offering a much-needed lifeline for UK businesses until the economy has stabilised and conventional economic activity has resumed.
by Oliver Watt