Sunak's Summer Economic Statement

Rishi rides to the rescue (Part 2 of 3)

Fraser Raleigh writes about the Chancellor's approach to the 'mini budget'

The Chancellor, Rishi Sunak, today returned to the Commons to set out part two of his three part series to respond to the evolving challenge of COVID-19: protection, jobs and rebuilding.

If part one - protection - was designed to put a safety net under the economy during lockdown with unprecedented interventions such as the furlough scheme, then today’s part two - jobs - was an attempt to limit the immediate economic damage as the Chancellor gradually removes that safety net and the economy continues to unlock.

Confirming that the furlough scheme would wind down by October as planned, the Chancellor outlined incentives to encourage employers to retain as many of their furloughed employees as possible with a new jobs retention bonus of £1,000 for each furloughed member of staff kept in meaningful and sustained work until January.

There were announcements for younger workers at risk of becoming a lost generation, with a new kick-starter scheme that will pay employers to create new jobs for 16-24 year olds at risk of long-term unemployment. The Government will cover the wage bills of new workers at the minimum wage level as well as paying additional overheads for employers. Firms will also be paid to bring on trainees and to create new apprenticeships, with bonuses for each one.

A new Green Homes Grant, designed to create new green jobs, reduce household bills and help the UK towards its climate change targets, was also confirmed, having been trailed earlier in the week, with the Government providing vouchers for homeowners and landlords to make their homes more energy efficient. 

The key tax changes were, as widely predicted, kept for the housing market and the hospitality sector. The stamp duty threshold rises immediately to £500,000 on a temporary basis until 31 March next year, and the hospitality industry will see a six month cut to 5% from 20%. In a sign of the genuine concern in government for the short term survival of the sector over the summer, the Chancellor even offered to buy the country lunch, with a one off 50% discount in participating outlets available to everyone in August.

The Chancellor will be aware that sequels are rarely as well-received as the original, and that far tougher choices still await him in the Autumn Budget and Spending Review he confirmed today. He will also know that the final part of his series - rebuilding - will be a much longer-term challenge.

But he will hope that he has done enough to shore up short-term confidence, and to convince voters that he is still prepared to embrace the sort of direct interventions in the economy that no previous Conservative Chancellor would ever have countenanced in normal times.

'A New Deal, or a meal deal'

Christine Quigley  assesses the statement from the point of view of the Opposition and discusses the Shadow Chancellor's first major outing at the despatch box

Labour has been clear in its messaging in recent days that a 'Back to Work Budget' focused on securing and creating jobs should be the Chancellor's priority, and Shadow Chancellor Anneliese Dodds expressed her disappointment at the Government's lack of ambition. The party's immediate response has been to criticise the statement as a meal deal, not a New Deal, while it may focus in the coming days on how encouraging people to eat out in restaurants and fast-food outlets doesn't chime with the Prime Minister's stated drive to tackle obesity.

The Shadow Chancellor was particularly critical today of what she sees as the Government's 'one-size-fits-all' approach to the Job Retention Scheme and has emphasised the need for additional support for industries and categories of workers that have fallen through the cracks. As pressure grows from sectors dominated by female business-owners and employees, such as the beauty industry, currently arguing that they have been deprioritised compared with more traditionally male-dominated sectors, Labour may well take up this cause more forcefully in the coming days. They will also be seeking to portray the headline Eat Out to Help Out scheme as a sop to middle-class voters rather than a meaningful intervention to support the hospitality sector.

Labour is also seeking to tie the Government's economic response to its health response, and Dodds used some of her time at the despatch box to criticise both its handling of the test-and-trace programme and the 'low value and limited scope of sick pay', which she argued has made it challenging for many people to self-isolate. With health a heartland issue for Labour, this narrative is likely to dominate much of the party's commentary in the coming weeks.