Summer Economic Update: Chancellor reveals plans to support UK recovery

Summer Economic Update: Chancellor reveals plans to support UK recovery

In his Summer Economic Update Chancellor of the Exchequer Rishi Sunak today (8 July 2020) unveiled a ‘Plan for Jobs’ worth up to £30 billion to support the UK’s recovery from the Coronavirus outbreak.

In his address in the Commons, the Chancellor delivered a much-anticipated statement on the Government’s plan for entering the second phase of the recovery.

In our latest blog, we outline some of the notable changes to existing initiatives and explore what these alterations mean for early-stage and growing businesses.

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Changes to the furlough scheme

One notable headline change to existing government policy is the alteration set to be made to the Coronavirus Job Retention Scheme (CJRS).

Sunak confirmed that the Government’s flagship furlough scheme currently in operation is set to wind down until the end of October.

To support workers and businesses with this transition, UK employers will net a one-off bonus of £1,000 for each retained furloughed member of staff who is still employed as of 31 January 2021.

The new Jobs Retention Bonus requires the business to pay an employee at least £520 on average, in each month from November to January. This bonus will apply for all furloughed employees, subject to firms meeting the above condition.

The Chancellor also announced in his Summer Economic Update a new £2 billion Kickstart Scheme to support young people in their search for employment.

Sunak announced that the Government will pay young people’s wages for six months (plus an amount for overheads) to ensure businesses create new jobs for 16-24-year-olds.

Funding available for each six-month job placement will cover 100% of the National Minimum Wage for 25 hours a week, though employers will be able to top this up at their discretion.

At the time of writing (8 July 2020), there is set to be no cap on the number of places available.

The scheme will open for applications in August and run until December 2021, with the option of being extended.

The funding is conditional on the business proving these jobs are new and supplemented with training and support to help ‘Kickstarters’ find a permanent job.

Related Article | Practical ways to support employees through COVID-19

A total of £1.6 billion is set to be invested in employment support schemes, training, and apprenticeships.

In the build-up to the Chancellor’s speech earlier this afternoon, the Government pledged to provide 30,000 new traineeships.

Under the £111 million scheme to triple the number of traineeships in 2020-21, firms in England will receive a payment of £1,000 for each new work experience place offered to eligible candidates.

These traineeships will consist of a blend of work experience placements, training, and work preparation, last from six weeks to six months and can lead to apprenticeships, further education, and employment.

To support the return to work, the Chancellor also outlined changes to apprenticeships:

  • For the next six months, the Government will pay employers to create new apprenticeships.
  • Eligible firms will receive a payment of £2,000 for each apprentice recruited under the age of 25.
  • Companies onboarding apprentices aged over 25 will receive a bonus of £1,500.

These changes run concurrent to the existing £1,000 payment the Government already provides for new 16-18-year-old apprentices.

Employers must apply between August 2020 and January 2021.

Related Article | Coronavirus: How to manage cash flow and working capital

Latest figures released by HM Treasury

According to the latest set of figures released by the Treasury yesterday (7 July 2020), the Government’s support schemes have:

  • Approved over one million Bounce Back Loans worth over £30.9 billion.
  • Approved more than 53,500 Coronavirus Business Interruption Loans, with firms benefiting from almost £11.5 billion of government-backed lending.
  • Protected 9.4 million jobs through the furlough scheme, with £27.4bn claimed in total.

Similarly, according to figures released yesterday (7 July 2020) by the British Business Bank, 376 companies have been approved for £379.9m worth of Convertible Loan Agreements since the Future Fund scheme was launched on 20 May.

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