Rishi Sunak unveils £30bn Covid-19 job recovery plan

Measures include a VAT cut which could benefit businesses in the hospitality sector

On Wednesday, 8 July, Chancellor Rishi Sunak revealed a job recovery plan “to protect, support and create jobs” as part of a second phase of the government’s economic response to Covid-19.

Rishi Sunak took over as Chancellor in February 2020.

Sector body Co-operatives UK said some of these initiatives might benefit co-operatives, particularly the Job Retention Bonus, the Eat out to Help Out scheme and the Kickstart scheme.

The £30bn job recovery plan includes a new policy to reward and incentivise employers who successfully bring furloughed staff back. While the furlough scheme will support businesses and people only through to October, employers will receive a one-off payment of £1,000 to UK for every furloughed employee who remains continuously employed through to the end of January 2021. 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.

“Our message to business is clear: if you stand by your workers, we will stand by you,” said the chancellor.

A new Kickstart Scheme is also being launched to directly pay employers to create new jobs for any 16 to 24-year-old at risk of long-term unemployment. The jobs will need to be with a minimum of 25 hours per week paid at least the National Minimum Wage. In practice, the scheme would enable a 24-year-old to obtain a £6,500 grant.

“If employers meet these conditions, we will pay young people’s wages for six months, plus an amount to cover overheads,” he said. The scheme will be funded by an initial £2bn.

The government will also pay businesses to hire young apprentices, with a new payment of £2,000 per apprentice and introduce a brand-new bonus for businesses to hire apprentices aged 25 and over, with a payment of £1,500.

Co-operative businesses that employ staff will be able to benefit from these schemes.

Additional funding will be provided to Job Centres and the National Careers Service. Co-operatives UK has written to the Secretary of State for the DWP, Therese Coffey MP “to remind her of the benefits of co-operative enterprise and to urge her to ensure that co-op options are included in new enterprise advice.”

In terms of housing, the government will allocate a £2bn Green Homes Grant, enabling homeowners and landlords will be able to apply for vouchers to make their homes more energy efficient and create local jobs.

The grants will cover around two thirds of the cost, up to £5,000 per household and the whole cost up to £10,000 for lower income households.

Totalling £2bn, the voucher scheme will be accompanied by a £1bn of funding to improve the energy efficiency of public sector buildings.

Head of policy at the Confederation of Co-operative Housing, Nic Bliss, said the measures could benefit individual homeowners, and community-led housing organisations that include forms of individual homeownership.

He added: “There is a suggestion that the grant may also be applicable for landlords – and if this is the case then it could be useful for community led housing organisations generally. But as yet – we don’t know how the scheme would work. A further issue is that many community led housing organisations may already have done environmentally upgrades to their properties such as installing energy efficient boilers, insulation, better windows etc. and/or have developed their homes at an already high level of environmental efficiency (because this is a particular driver in the community led housing sector).”

With the hospitality sector being amongst the most affected by the Covid-19 crisis, the government will be cutting VAT on food, accommodation and attractions, from 20% to 5%.

Around 80% of hospitality firms temporarily stopped trading in April with 1.4 million workers furloughed.

The chancellor is also introducing an Eat Out to Help Out discount. Businesses will be able to register to offer meals at 50% off, up to a maximum discount of £10 per head. These provisions will help to support community owned pubs, cafés and restaurant.

The head of community business at the Plunkett Foundation, Chris Cowcher, said: “Community pubs and cafes face a challenging road ahead as they reopen their doors, implement social distancing measures and try and attract customers back. So far these businesses have shown great adaptability and innovation to keep supporting those who need them most during this crisis. It is clear, however, that customer levels will not return to pre-Covid levels immediately, so we welcome any initiatives which are clear and straight forward to implement to support businesses has they face this unique challenge.

“The new Eat Out Help Out Scheme announced by the chancellor is a positive step towards getting customers through the doors of community businesses – but the process must be kept simple to make it attractive to community businesses. At a time when local networks and services have come to the fore and provided lifelines to many people, we encourage everyone to keep on supporting their local community pubs, cafes and all community owned businesses.”

Social Enterprise UK’s deputy CEO, Charlie Wigglesworth, said: “We welcome the chancellor’s focus on jobs and providing support to those that need help, particularly young workers. Social enterprises have a fantastic record on employment, creating more jobs on average than the rest of the private sector, and for the people and places that need these jobs the most. We look forward to engaging with the government and sharing the lessons from our sector about how to create jobs.

“The government must ensure that any short term support creates a long term legacy. All the schemes announced today should support social enterprises, which have proven time and time again that they can create sustainable employment in all parts of our country. Not every business is equal, and we should make sure that those which put society and our planet before profit are at the front of the queue for support.”