Chancellor Announces Changes To Furlough Scheme, Green Recovery and VAT 

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• Chancellor Announces Changes To Furlough Scheme, Green Recovery and VAT 

08 July 2020 | Updated 09 July 2020

Rishi Sunak has today provided a recovery plan to stimulate the economy, including a Job Retention Bonus for employers.

Sunak also introduced a three-point plan for job recovery, cut VAT to 5 per cent for tourism and hospitality and launched a Kickstart Scheme to create new jobs for young people.

“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.”

–Rishi Sunak

Chancellor of the Exchequer 

 

What’s Changing?

 

Here are the key takeaways from the Chancellor’s speech today:

 

• Job Retention Bonus – Employers can bring back someone who was furloughed and get paid a £1,000 bonus per employee. They will need to be continuously employed through to January 2021 and the employee must be paid at least £520 per month on average
• Kickstart Scheme - This will directly reward employers that create new jobs for 16-24-year-olds. A minimum of 25 hours per week must be paid, and the government is committing an initial £2 billion towards the scheme. Employers can apply to be part of the scheme from August 2021
• Department for Work and Pensions – £1.2 billion is being pledged for the DWP
• £2 billion Green Homes Grant – Homeowners and landlords will be able to apply for vouchers to make their homes more energy-efficient and create local jobs. The grants will cover at least two-thirds of the cost, up to £5,000 per household
• Buildings – £1 billon of funding to improve the energy efficiency of public sector buildings
• Stamp Duty Cuts – Stamp Duty has been cut on homes up to £500,000, effective immediately
• VAT cuts – VAT in hospitality and tourism will be cut from 20 per cent to five per cent. This will be effective from 15 July 2020 until 12 January 2021
• Eat Out to Help Out Scheme –  Meals eaten at any participating business, Monday to Wednesday, will be 50 per cent off, up to a maximum discount of £10 per head for everyone, including children. Businesses will need to register and can do so through a website, opening on 13 July 2020. Each week in August, businesses can claim the money back

 

Industry Reaction – Green Recovery

 

Watch the short video to hear the industry reaction to the government's announcement: 

 

"Buildings and construction together account for over a third of global energy use, and nearly 40 per cent of all CO2 emissions in the UK. To ensure a green and socially responsible recovery from this pandemic, we need to fundamentally change how we look at these buildings. We think of buildings as absorbers of energy, but they should become generators."

–Richard Hyams 

Founder, astudio

 

In response to today’s mini-budget economic update from Rishi Sunak, Chris Venables, Head of Politics at Green Alliance, commented:

“Today’s speech could mark a really positive first step on the green recovery - but only if this ambition is continued throughout the rest of the year, and particularly in the Autumn budget. 

“We urgently need to see a clear funding strategy for supporting public transport in its time of crisis, a long term strategy to ensure all buildings are warm and cheap to run, reversing the catastrophic declines in nature, and investing the technology of the future. 

Richard Hyams, former Norman Foster architect and founder of astudio, added that the government’s pledge of a £3bn green investment package to decarbonise public buildings and minimise emissions from homes in the UK is a welcome step:

"Buildings and construction together account for over a third of global energy use, and nearly 40 per cent of all CO2 emissions in the UK. To ensure a green and socially responsible recovery from this pandemic, we need to fundamentally change how we look at these buildings. We think of buildings as absorbers of energy, but they should become generators.

"New insulation is vital in tackling fuel poverty as well as increasing the sustainability and affordability of existing homes, but we must also remember we face another crisis in affordable housing, with a third of local authorities missing their housebuilding targets even before the pandemic.”

Pradyumna Pandit, MD for Sustainability and Energy Services at Mitie, added that he was pleased to see the government leading by example with the fund to make public sector buildings more green, but highlighted that the private sector must also echo this: 

“With around 65 per cent of the commercial building stock that will be used in 2060 already built, if the UK is going to meet its net zero emissions targets the government needs to encourage the private sector to make green investments too. As companies begin to get back to business, now is the time to ensure that green thinking is leading the UK’s economic recovery.”

 

"In addition to improving the energy efficiency of buildings themselves, we must turn to more sustainable construction methods. Critically important for an industry in which buildings and construction together account for over a third of global energy use and nearly 40 per cent of all CO2 emissions."

–Kirk Taylor

Head of Development, Kajima Partnerships

Kirk Taylor, Head of Development at Kajima Partnerships, commented on the importance of looking at every step of the building process, if we are to deliver a greener future:

"Many of the UK’s schools, hospitals and other public spaces are adapting to cater to future generations, evolving to be more resilient, more flexible, but also more sustainable through use of smarter, more intelligent buildings. While a pledge of £1bn towards improving the energy efficiency and environmental impact of these buildings is a promising step, there is further we can go to meet the net-zero carbon emission goals for 2050.

"In addition to improving the energy efficiency of buildings themselves, we must turn to more sustainable construction methods. Critically important for an industry in which buildings and construction together account for over a third of global energy use and nearly 40 per cent of all CO2 emissions.

"Offsite modular construction is one such solution that we now must seize with both hands. Modular construction can deliver high-quality classrooms, precision-engineered operating theatres, hospital wards and community care facilities affordably, sustainably, safely at pace."

 

Hospitality VAT Cut 

 

Jonathan Hubbard, Head of Hospitality EMEA at Cushman & Wakefield, commented: “We welcome the Chancellor’s announcement today with measures to help the UK hospitality industry.

"The sector has long been campaigning for a cut in VAT to create a level playing field with other European destinations so whilst it is a positive step now, it needs to be seen as part of a longer-term initiative and not just a short term impetus to counter some of the impacts of the COVID-related lockdowns. The challenge facing the UK hospitality industry is substantial and this is only part of the solution."

Peter Webb, Managing Director at Electronic Temperature Instruments (ETI) a company that produces digital and infrared thermometers for the foodservice industry, also welcomes the cut: 

“These are unprecedented times, therefore we need unprecedented measures. Hospitality businesses needed this welcome dose of reassurance and confidence in order to stabilise their business and support their workforces. 

“This VAT cut confirms the government’s commitment to getting behind British business throughout this ongoing crisis and helps stabilise employment and supports productivity within this space. Traditionally, approximately 80 per cent of our business comes from the food and drink space; what we call ‘farm to plate’, so this move is welcomed.”

Picture: A photograph of Rishi Sunak in the House of Commons today. Image Credit: The Times

Article written by Ella Tansley | Published 08 July 2020

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