Accounting Analytics Balance Black And White 209224


Reaction: Sunak’s Summer Economy Update

James Kenealey covid-19

Rishi Sunak

Earlier this month, the Chancellor announced a series of measures that have been introduced to encourage increased spending and keep cash within businesses which will, in turn, give employers more reason to bring staff back from furlough and even make new hires.

Consumers have been gifted with generous discounts in the leisure and hospitality sectors throughout August, while a dramatic reduction in the VAT rate for food, accommodation and attractions, from 20 per cent to 5 per cent until next January, will help some of the businesses severely impacted by COVID-19. Meanwhile, there has been a rise on the stamp duty threshold for all buyers, for six months, to £500,000, to get the housing market moving again.  

If these new cash-generating techniques have their desired effect, businesses will be able to use them in conjunction with new recruitment incentives to normalise or even increase their staffing levels. For example, the Job Retention Bonus awards employers a £1,000 bonus for every furloughed worker they choose to keep on past lockdown, while the Kickstarter scheme will encourage business leaders and management teams to create new jobs for people aged 16-24, so the youngest in society are given an opportunity to source employment.

While for many, these are very welcome introductions to get the UK economy moving again, we are encouraging businesses to look beyond these top-level announcements, ensuring they pay attention to the finer detail – as that’s often where the devil lies.

Here, three of our Group’s figureheads assess the benefits to certain sectors from this latest economic update but analyse the wider impact of their introduction on the UK economy and its labour markets.

Ged Mason OBE, CEO

“It was a positive for us all to see Rishi Sunak take additional steps to rebuild businesses and consumer confidence. That said, many of the initiatives were geared towards hospitality rather than a broad spectrum of sectors; what benefit do these schemes have for aviation, for example?

“Furlough has been a vital lifeline for many, but it shouldn’t – and cannot – go on forever. The way businesses look today is an almost ‘new world’ and companies need to be proactive and plan rather than rely on state aid to survive. We were hoping for a review of National Insurance to add a real difference to the wider job market and general levels of incomes; while this didn’t happen, any help that the Government is offering should be seen as a bonus.

“Of particular note was the apprenticeship contribution announcement – this is undoubtedly a positive, but for it to be effective depends on sales and revenue generated by businesses. Apprenticeships are crucial to the wider functioning of society as they are relevant in so many sectors, where new skills are needed to cushion retirement cliff edges. We need to start training young people now to enter these markets or we simply won’t have enough new labour and resource for several industries to thrive, so this is a tenacious move from Government.”

Rhys Harris, Associate Director – Engineering, Process & Construction

“The Summer Update was welcome news to the construction sector, especially as it had a particular emphasis on boosting recovery in the housing market. Construction is a key signal within public perception that economic prosperity is on the up, and the PM has already laid out his plan to ‘build, build, build’ – something that will play a key part in repairing the wounds inflicted by this crisis.

“The temporary cut to stamp duty for houses priced up to £500,000 should certainly help housebuilders sell homes and will be a real incentive to the public to invest in property, both old and new. This should be a welcome introduction to the wider supply chain in construction – everything from manufacturers of building products through to the home improvement industry.

“Some worry about a surge in the building of new homes, wondering whether our country’s infrastructure is fit to handle it. But the Chancellor himself said he would be investing in all areas of the country – better roads, better schools, better high streets. Better infrastructure all round.

“This accelerated infrastructure expenditure in something other than the HS2 programme is a very welcome message to the sector. Major construction players are desperate to retain key skills in the industry, so the Government funding is critical to the stabilisation process as we emerge from this period which will be forever etched in our history.

Matt Leavis, Group Training Director

“The apprentice bonus of £2,000 per hire represents another incentive for businesses to recruit apprentices under the age of 25. In some sectors, this additional value represents a significant contribution to the initial employment costs, with it potentially offsetting up to 40 per cent of the salary of an apprentice on an apprentice wage. 

“By bringing apprenticeships back into the spotlight, it may serve to better break down some of the stigmas attached to this method of recruitment and we may one day see an apprenticeship viewed as a viable alternative to university. There are many stereotypes around apprenticeships, but we need to change this mindset within businesses, especially as senior leadership teams themselves can upskill through graduate or degree level apprenticeships whilst in employment.

“However, the Government must be careful with its implementation of this scheme. Some training providers will, sadly, look to cash in on this, meaning there will be a high volume of apprenticeships offered but the result will be swathes of low skilled apprentices who remain on the job market for years through poor training. This just doesn’t work and doesn’t tackle our existing skills problems – it adds to them, and the individual who was supposed to benefit loses out.

“Instead, we need to prioritise sustainable and gainful employment pathways. Businesses and people on the lookout for employment need to work with professional partners, like Morson Training, who can take proactive steps to look at their skills gaps with a holistic, long-term view, suggesting relevant industries where they could flourish and bring much-needed skills.

“It will be interesting to see the finer detail of this scheme as it’s released, but hopefully, the Government will introduce phased funding, making training providers hit certain milestones that are in the best interest of the apprentice before getting paid.”

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