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8 Jul 2020

Summer Statement: what it means for your money

All you need to know about the Chancellor's economic update

A stamp duty holiday, jobs for under 24s, eating out vouchers and a VAT cut have all been announced in Chancellor Rishi Sunak's Summer Statement.

Though early rumours implied it would be 'low key', the speech did include a number of schemes and measures that could have an impact on your money.

Mr Sunak dubbed the statement his 'Plan for Jobs', and made a number of announcements intended to avoid mass unemployment. Though Shadow Chancellor Anneliese Dodds said many big decisions had been 'put off' until the autumn.

Here, Which? sorts through what the Chancellor said to help you make sense of what exactly it means for you and your money.

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Ending the furlough scheme

The Chancellor confirmed plans to wrap up the furlough scheme in October, saying 'it cannot and should not go on forever'.

However, he did unveil a new 'job retention bonus' for employers who bring back furloughed staff and keep them in work until at least January 2021.

If you're currently on furlough, your employer will receive a £1,000 bonus if it brings you back to work and pays you at least £520 a month between November 2020 and January 2021.

Mr Sunak was clear that the bonus was available for all nine million people on furlough, potentially costing the Treasury £9bn.

However, before this announcement, many businesses struggling to succeed under social distancing measures were thought to prefer a continuation of the scheme in some form.

Some suggested a more targeted approach, allowing certain sectors to keep staff furloughed past October.

Kickstart jobs scheme and trainee incentives

The Treasury will fund the creation of hundreds of thousands of jobs for 16 to 24-year-olds under what it's called the 'Kickstart Scheme'.

The Chancellor said under 25s are two and a half times more likely to work in a sector that was disrupted by the pandemic, putting them at greater risk of unemployment.

The scheme will see the government pay the wages of young workers for six months up to the National Minimum Wage for 25 hours a week, with employers having the option to top it up.

To receive funding, employers must prove these are newly created jobs which include training.

Mr Sunak said the first 'kickstarters' will start work under the scheme in the autumn.

Alongside this, Mr Sunak announced the launch of a trainee incentive scheme, which will pay employers £1,000 for every trainee they take on board. He said this will triple the current number of trainees.

Employers will also be paid bonuses for creating new apprenticeships, to the tune of up to £2,000 per position for under 25s and £1,500 per position created for over 25s.

In theory, this will increase the number of opportunities available to young workers, but you'll have to keep an eye out for when the first 'kickstarter' positions become available.

Stamp duty holiday

Taking a breather from announcements on jobs, Mr Sunak announced a stamp duty 'holiday' in England and Northern Ireland for six months starting today (8 July 2020) and lasting until 31 March 2021.

The holiday will see a rise in the property value threshold at which stamp duty is paid to £500,000.

Stamp duty is tiered, meaning you pay different rates on different 'portions' of the property price.

Before today, homemovers would start paying it on the value above £125,000 and first-time buyers would start paying on the value above £300,000.

For the next six months it will be charged like this:

Property valueStamp duty payable on the portion of the price for first-time buyers and homemovers
Up to £500,000Zero
£500,001 to £925,0005%
£925,001 to £1.5m10%
Over £1.5m12%

People buying second homes and buy-to-let properties will be an extra 3% on each tier.

Home insulation vouchers

Staying with property for a moment, the Chancellor announced that homeowners across the UK will receive thousands of pounds in vouchers to make green home improvements.

The Green Homes Grant will see the government pay at least two-thirds of the cost of energy-saving home improvements, such as new insulation, to the tune of up to £5,000 per household.

The government will pay the full cost for the poorest households, which could receive up to £10,000.

The scheme is due to launch in September, and you'll have to apply for the vouchers online.

Temporary VAT cut

Towards the end of his speech, the Chancellor moved onto measures that he hopes will boost consumer demand.

The first of these is a temporary VAT cut, from its current rate of 20% to just 5%, but only for the struggling hospitality sector.

The lower rate will apply to food and drink at restaurants, pubs and cafes, as well as payments for accommodation and attractions in the UK - so you may see lower prices for all these things, starting from 15 July, when the temporary cut kicks in, and ending on 12 Jan 2021.

It's possible, however, that businesses won't pass the VAT cut onto customers by cutting prices, as they are not obliged to do so.

If this is the case, the VAT cut might not make much difference to consumers at all.

Eating out vouchers

Perhaps the most eye-catching announcement of the day, the government will introduce what it is calling the 'Eat Out to Help Out' scheme.

This is essentially a discount for anyone eating in pubs, cafes or restaurants, but there are a number of caveats attached.

  • The scheme will only run for the month of August
  • Each person will receive up to 50% discount on food and non-alcoholic drinks with the discount capped at £10
  • Vouchers are only valid Monday-Wednesday

The aim is for these vouchers to encourage people to go back to restaurants and cafes if they're worried about venturing out after months of staying at home.

They have received a mixed reception on social media, as rumours before the statement suggested a £500 voucher to spend on high street retailers might be announced.

What wasn't in the speech

The most notable omission from the 'Plan for Jobs' was any mention of new help for the self-employed.

Self-employed workers have struggled throughout the pandemic, and the government has been accused of prioritising those in traditional full-time employment.

After launching its job retention scheme first, the government only announced its self-employed income support scheme when critics demanded freelancers get similar help.

The 'job retention bonus' was announced to get those on furlough back into work, but many will be looking to Mr Sunak for more help for the self-employed when current support measures end.