The Chancellor’s coronavirus package will protect jobs but he needs to do more to help businesses recover.
That’s our view on Rishi Sunak’s summer statement.
Rob Johnston, Chief Executive of Cumbria Chamber of Commerce, said: “We called for a stimulus package and he’s provided one.
“But it’s clear that the thrust is about protecting jobs in the short term rather than building a long-term recovery.
“For example, we’d have to like to see grants to help businesses adapt their premises and business models to operate safely and profitably under social distancing.
“We’d also have liked him to reduce employers’ National Insurance contributions and extend some of the grant schemes to help businesses facing cashflow issues.
“The Government is worried that there will be a jump in unemployment when the furlough scheme ends and this package is primarily about minimising that.”
The Chancellor’s measures include:
Cutting VAT to 5% on eating out, accommodation and attractions, plus a voucher scheme in August to encourage people to dine out;
Raising the stamp duty threshold to £500,000 to boost the housing market and help housebuilders;
A £1,000 bonus for firms that keep on furloughed staff;
A Kickstart subsidy to encourage employers to take on unemployed youngsters under 25;
A £1,000 subsidy for recruiting trainees and a bonus of up to £2,000 for taking on apprentices;
Grants of up to £5,000 – £10,000 for low-income households – towards energy-efficiency measures.
Rob added: “The Kickstart scheme for under-25s will keep many youngsters off the dole and the incentives for employers to take on trainees and apprentices are welcome.
“The VAT cut for hospitality won’t necessarily be passed on to consumers but it will allow those businesses to increase margins to claw back some of the money they’ve lost.
“There are two main factors inhibiting consumers. Some people are reluctant to go out until the Covid infection rate comes down and some are worried about their jobs and don’t want to spend money they might need if they get made redundant.
“The Chancellor can’t wave a magic wand to remove these concerns but he’s done his best to persuade people to start spending.
“Our worry is that many of his measures are temporary. The VAT cut and apprenticeship subsidy apply until January and the increase in the stamp duty threshold until March.
“But the effects of the coronavirus pandemic will be with us well into next year and beyond.
“Some changes in consumer behaviour are likely to be permanent and ministers must think long and hard about how they help businesses adapt to the new normal.
“In addition, many businesses have taken on debt during lockdown. That inhibits their ability to invest and so hinders economic recovery. Ministers need to address that too.”