Sunak’s summer statement: from stamp duty to sausage rolls

Everything students need to know about the chancellor’s plan for a V-shaped recovery.

Photography by Number 10 on Flickr

On Wednesday, the Chancellor of the Exchequer, Rishi Sunak, announced a series of measures to help the economy bounce back from coronavirus. In April, the economy shrank by 20.4%, the largest monthly fall on record.

Sunak, who replaced Sajid Javid in Number 11 in February, declared that the government would spend £30 billion in the country’s second phase of recovery to combat the threat posed by the deadly and costly pandemic.

These measures, now dubbed the “Plan for Jobs,” included a kickstart scheme to incentivise businesses to employ young people and an “Eat Out to Help Out” voucher scheme to encourage people to return to restaurants.

However, the front page of the Financial Times reported that these measures would push government borrowing over £350 billion. A figure that is expected to rise once the government enters its third phase of recovery.

But what does this mean for young people? The Mirror claimed that people aged between 16 and 24 are among those who benefit most from the newest measures; however, this will not include students. 

The £2 billion support scheme for young people will encourage almost half a million people under 24, who have been supported by universal credit, to enter the workplace on six-month-long taxpayer-funded placements. 

The Telegraph highlighted that this will not ease the pain exerted on recent university graduates as it will do nothing to reverse the drop in graduate opportunities. Between January and May, recruitment of graduates fell by a staggering 76%. The cancellation and postponement of internship programmes will deliver a further blow to students.

The chancellor, a former analyst at Goldman Sachs, has also provided employers with access grants of up to £1,000 for every new job created. Again, these tend to be in sectors away from university campuses and instead concentrate on construction and social care. According to BBC News, however, this will treble the number of trainee workers. 

He went on to address growing concerns about the furlough scheme. He claimed that calls for indefinite extensions to the job retention scheme would be “just as irresponsible as it would have been, back in June, to end the scheme overnight.”

Sunak, who only entered the Commons in 2015, added: “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.”

Subsequently, the furlough scheme will fizzle out by October at the additional cost of £9.4 billion. Part of this cost will be in one-time payments to persuade businesses to retain previously furloughed workers.

The government also introduced tax cuts in the fight to return to economic normality. These include a targeted slash to VAT, and an increase to the stamp duty threshold.

The VAT rate for the hospitality sector, which will include goods from non-alcoholic beverages to hot takeaway food, will temporarily fall from 20% to 5%. This is the most significant change to VAT since Margaret Thatcher almost doubled the rate from 8% to 15% in 1979. 

Sunak’s support for the hospitality industry, in the form of tax cuts and vouchers, may come as welcome news to students across the capital, with many frequenting London’s pubs and restaurants. 

This relief will also help to protect students employed in the industry. In 2013, Conrad Lashley found that over two in five students at the University of Nottingham worked in a restaurant during their studies. An additional one in five respondents had worked behind a bar. 

Despite this announcement, John Lewis and Pret a Manger are reported to be among several coronavirus-related casualties to the British high street. The Sun has claimed that this threatens an additional 60,000 jobs.

Nevertheless, Sunak’s comments on stamp duty may come as a relief to recent graduates and potential homeowners employed in and around London. The new rules will ensure that would-be buyers will pay no stamp duty on residential property under £500,000. 

The chancellor went further and refused to rule out a permanent cut to stamp duty. Students may approve of such measures as a boost on their own path to homeownership. 

In 1996, almost half of people in their late twenties owned their own home, however, in 2016 this number had fallen to just 25%. 

A permanent increase to the stamp duty threshold will help to reduce the cost of homeownership for young people who have struggled to get on the property ladder.