Money For Nothing
Rishi Sunak framed his statement on economic recovery today as a question ‘not just of economics, but of values’. The Chancellor is so committed to Britain building back from the pandemic that he will pay for your double glazing, guarantee your kid a job and even buy you dinner (Monday to Wednesday, to a value of £5 per head, etc). And he wants everyone to know that whilst he is going to keep spending money he is not profligate - so he is going to end the furlough scheme in October as planned. And, by the way, here’s some tax cuts to boost demand and buy off the Tory right. Something for everyone, basically. And delivered with the remarkable, un-self-conscious sincerity that is becoming Sunak’s trade-mark.
Will it work? It is - of course - too early to say. Job creation schemes such as the £3 billion pledged to ‘green’ Britain’s homes have a habit of not creating anywhere near the number of jobs promised. And the Government paying for a Wednesday night Toby Carvery only works if you and your family feel genuinely safe about re-entering public spaces. If not, a fiver isn’t much of a bribe.
But the optics of it all are fascinating. Sunak was appointed to be a Boris yes-man (or a Cummings yes-man, in some accounts). But in a remarkably short time he has carved for himself a truly interesting political position. So far, he has essentially escaped criticism for anything that has failed and enjoyed wide, personal approval for anything that has gone right. Not bad going for a relatively recent arrival on the frontbench.
The package announced today does not answer anywhere near all the questions posed by Coronavirus and the recession it has plunged us into. But it does answer the question of whether Rishi was overpromoted and is out of his depth. He wasn’t, he isn’t and faced with this real test of political nouse, he passed. A relief for the Government - of course. But one can’t help but wonder whether Boris Johnson might not be feeling just a little nervous about his preternaturally popular protege.
In reality there are massive holes in the Government’s latest plan. Where is the Energy White Paper for a start? The energy saving schemes are just rehashed from the Gordon Brown era and the new ideas look flakey at best. There was no sense of how all this is going to be paid for. Sunak might look like the Boy Wonder but will get judged on the results. He is very smooth and looks head and shoulders above his Cabinet colleagues but the economic catastrophe is real and the current plan looks like fantasy.
Summary of announcements include:
State of the economy
- UK economy contracted 25% in two months earlier this year.
- The Bank of England and Office for Budget Responsibility predict a steep economic recession and job losses during the second half of 2020.
- The second phase of recovery was about jobs, with the third about rebuilding which will be part of the Budget and Spending Review that takes place in the Autumn.
Skills and employment
- A “jobs retention bonus” that awards £1,000 to businesses who bring back employees from furlough amounting to £9bn if all employees were returned to work.
- £2bn “Kickstart Scheme” that will pay employers to create jobs for 16-24 year olds out of work.
- Employers will be paid £1,000 to take on new trainees, with triple the number of places available.
- £100m to support more places on level 2 and 3 courses for 18 to 19 year-olds in high demand sectors such as engineering and the social care sector.
- £1bn of extra funding to double the number of job coaches and widen related welfare and access-to-work schemes.
- Access to be enhanced for Career’s advice support for 250,000 more people.
- £17m to triple the number of work academies.
- For 6 months businesses will be paid to hire young apprenticeships – £2,000 per apprentice, and £1,500 to hire those 25 years old and above.
Housing and infrastructure
- £2bn Green Homes Grant with vouchers to make homes more efficient of which the Government will pay two thirds of cost up to £5,000 per household, with low income homes having the full cost covered up to £10,000.
- An extra £1bn of funding has been committed to increasing the energy efficiency of public sector buildings as part of the Public Sector Decarbonisation Scheme.
- £50m pilot scheme to decarbonise social housing making up to 650,000 homes more energy efficient.
- A temporary increase in the threshold for Stamp Duty from £125,000 to £500,000 with immediate effect until 31 March 2021.
Culture and hospitality
- 6-month VAT cut in hospitality and tourism sectors from 20% to 5%.
- ‘Eat Out to Help Out’ scheme which will reduce meals out by 50% from Monday – Wednesday throughout the month of August.