Chancellor Rishi Sunak in desperate bid to kickstart the economy

Wednesday, 08 July 2020 5:47 PM [ Last Update: Wednesday, 08 July 2020 5:47 PM ]

Rishi Sunak tried to cut a confident figure today at the House of Commons

The Chancellor of the Exchequer, Rishi Sunak, has introduced a post-lockdown “kickstart scheme” to help alleviate the impact of the coronavirus-induced recession.

The central feature of the £30 billion plan is centered on a Value Added Tax (VAT) cut on food, accommodation and attractions for the next six months from 20 percent to 5 percent.

Other important features include introducing a jobs retention bonus reward for employers who bring back workers from furlough with £1000 paid for every recovered employee.

This element of the scheme will potentially cost £9 billion, provided all nine million furloughed workers are swiftly returned to work.

Furthermore, the threshold for paying stamp duty will be temporarily increased from £125,000 to £500,000 until March 31, 2021, which in practical terms means the average stamp duty bill will fall by around £4,500.

Addressing the House of Commons, the Chancellor acknowledged the gloomy economic outlook by warning that “hardship lies ahead” but vowed “no-one” will be left “without hope”.

However, Sunak did not fully explain how the scheme will be eventually paid for.

This has touched off a flurry of speculation with some commentators claiming it will be paid for through borrowing and tax rises in the mid to long term.

The scheme was immediately attacked by the opposition Labour party which claimed it does not go far enough and that the job retention money should be better targeted to prevent it going to firms that were already planning to bring staff back.

"We were promised a 'New Deal', but what we got was a 'Meal Deal'”, the Labour party added.

The kickstart scheme is the Chancellor’s second major fiscal and economic intervention during the coronavirus crisis.