Government announces Kickstart jobs scheme for young people and Eat Out to Help Out hospitality reductions

Chancellor of the Exchequer, Rishi Sunak,

The government has outlined plans for retaining, and creating, employment in a bid to encourage economic recovery in the UK.

Announced in Parliament today (July 8) by Chancellor Rishi Sunak, the measures include employer bonuses for keeping on staff who have been on furlough and  subsidies to create jobs for those aged 16-24.

In the Job Retention Bonus UK employers will receive a one-off payment of £1,000 for each furloughed employee who is still employed as of January 31, 2021. The employee must be paid £520 per month for each month through to January. This would be a £9billion policy to retain people in work.

The Chancellor said: “Leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before. And the longer people are on furlough, the more likely it is their skills could fade, and they will find it harder to get new opportunities.

“It is in no-one’s long term interests for the scheme to continue forever, least of all those trapped in a job that can only exist because of a government subsidy. So the furlough will wind down, flexibly and gradually, supporting businesses and people through to October.

“But while we can’t protect every job, one of the most important things we can do to prevent unemployment is to get as many people as possible from furlough back to their jobs. So, today, we’re introducing a new policy to reward and incentivise employers who successfully bring furloughed staff back – a new Jobs Retention Bonus.

“If you’re an employer and you bring someone back who was furloughed – and you continuously employ them through to January – we will pay you a £1,000 bonus per employee. It is vital people aren’t just returning for the sake of it – they need to be doing decent work. So for businesses to get this bonus, the employee must be paid at least £520 on average, in each month from November to January, the equivalent of the lower earnings limit in National Insurance.”

Kickstart Scheme

A new £2 billion Kickstart Scheme will also be launched to create hundreds of thousands of new, fully subsidised jobs for young people across the country. Those aged 16-24, claiming Universal Credit and at risk of long-term unemployment, will be eligible. Funding available for each six-month job placement will cover 100% of the National Minimum Wage for 25 hours a week – and employers will be able to top this wage up.

The Chancellor said: “Over 700,000 people are leaving education this year. Many more are just starting out in their careers. Coronavirus has hit them hard – under 25s are two and a half times as likely to work in a sector that has been closed. We cannot lose this generation, so today, I am announcing the Kickstart Scheme:

“A new programme to give hundreds of thousands of young people, in every region and nation of Britain, the best possible chance of getting on and getting a job. The Kickstart Scheme will directly pay employers to create new jobs for any 16 to 24-year-old at risk of long-term unemployment.

“These will be new jobs – with the funding conditional on the firm proving these jobs are additional. These will be decent jobs – with a minimum of 25 hours per week paid at least the National Minimum Wage. And they will be good quality jobs – with employers providing Kickstarters with training and support to find a permanent job.

“If employers meet these conditions, we will pay young people’s wages for six months, plus an amount to cover overheads. That means, for a 24-year-old, the grant will be around £6,500. Employers can apply to be part of the scheme from next month, with the first Kickstarters in their new jobs this autumn.”

Training and apprenticeships

A total of £1.6 billion will be invested in employment support schemes, training and apprenticeships to help people looking for a job.

This includes:

  • Businesses will be given £2,000 for each new apprentice they hire under the age of 25. This is in addition to the existing £1,000 payment the Government already provides for new 16-18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan.
  • A £111 million investment to triple the scale of traineeships in 2020-21 ensuring more young people have access to high quality training.
  • £17 million of funding to triple the number of sector-based work academy placements in 2020-21
  • Nearly £900 million to double the number of work coaches to 27,000;
  • Over a quarter of a million more young people to benefit from an extra £32 million investment in the National Careers Service.
  • Payments of £1,500 to employers offering apprenticeships to those aged over 25.

‘Green’ jobs

The government says the plan will also create tens of thousands of jobs through bringing forward work on £8.8 billion of new infrastructure, decarbonisation and maintenance projects.

This includes a £3 billion green investment package that could help support around 140,000 green jobs and upgrade buildings and reduce emissions.

As part of this package homeowners and landlords in England will be able to apply for vouchers from a £2 billion Green Homes Grant scheme this year to pay for green improvements such as loft, wall and floor insulation that could save some households hundreds of pounds a year on their energy bills while creating thousands of jobs for tradespeople.

A £1 billion programme will make public buildings, including schools and hospitals, greener, helping the country meet its ambitions of achieving Net Zero by 2050.

In addition, £5.8 billion will be spent on construction projects including:

  • £1.5 billion for hospital maintenance and upgrades
  • £100 million for local roads network
  • over £1 billion to start to rebuild schools in the worst condition in England, plus £760 million this year for key maintenance work on schools and FE colleges
  • £1 billion for local projects to boost local economic recovery in the places that need it most
  • £142 million for court maintenance to repair around 100 courts across England.

Tourism and hospitality

The tourism and hospitality sectors have been severely impacted by the pandemic due to necessary closures to protect public health. Some 80% of hospitality firms stopped trading in April and 1.4 million hospitality workers have been furloughed – the highest proportions of any sector.

To encourage people to return to eating out at restaurants the Government’s new Eat Out to Help Out discount scheme will provide a 50% reduction, up to £10 per person, for sit-down meals in cafes, restaurants and pubs across the UK from Monday to Wednesday every week throughout August.

Businesses will need to register, and can do so through a simple website, open next Monday. Each week in August, businesses can then claim the money back, with the funds in their bank account within 5 working days.

The rate of VAT applied on most tourism and hospitality-related activities will also be cut from 20% to 5%. This will save households around £160 per year on average and, together with the Eat Out to Help Out Scheme, will support over 2.4 million staff at over 150,000 businesses, helping them recover and reopen after the Covid-19 lockdown.

The Chancellor said: “Our economy relies on consumption, especially social consumption: The pubs, cafes, restaurants, hotels and B&Bs that bring life to our villages, towns and cities. Taken together these sectors employ over 2 million people disproportionately younger, women and people from Black, Asian and minority ethnic communities. And many rural and coastal communities rely on these industries.

“So the best jobs programme we can do is to restart these sectors and get our pubs, restaurants, cafés and B&Bs bustling again. I know people are cautious about going out. But we wouldn’t have lifted the restrictions if we didn’t think we could do so safely. And I’ve seen in the last few weeks how hard businesses are working to make their premises safe. And if we follow the guidance, and respect what they ask us to do, we can all enjoy summer safely.

“In turn, we need to give these businesses the confidence to know that if they open up, invest in making their premises safe, and protect jobs, demand will be there, and be there quickly.”

Stamp Duty

A temporary increase to the Nil Rate Band of Residential SDLT (Stamp Duty) from £125,000 to £500,000 is being introduced until March 31, 2021. In England and Northern Ireland nearly 9 out of 10 people getting on or moving up the property ladder will pay no Stamp Duty at all.