In The News
Article Date: 09 July 2020
Coronavirus Guidance Update 9th July 2020
The Chancellor, Rishi Sunak MP, announced at lunchtime yesterday a series of measures that he hoped might offer the UK economy a blueprint for employment – “A Plan for Jobs” – in order to preserve the productive capacity of the UK economy.
The Plan for Jobs is set out in a consultative document (CP261); the link is noted below.
The plan is set out in four parts;
Before taking a very simple look at each, the plan does not focus upon or highlight issues that are directly of benefit to the motor industry. All of the proposals are indirectly beneficial in that whatever steps are taken to protect the economy, they align favourably with those of the motor industry and in particular its customers.
Job Retention Bonus
Subject to details to be published later in July, this effectively offers a £1,000 bonus to an employer per employee who remains at work at the end of January 2021 who was at some time earlier furloughed.
The motor industry will benefit from this proposal because the motor industry accessed the furlough scheme in great numbers
There are no details of how this can be accessed yet.
Whilst a welcome measure, the concern for employers will how to assess and determine the demand for services and products throughout the rest of the year such that staff can be retained.
It may be that this measure as drafted might be a grant boost for those who recover but not for those who businesses where the decision to maintain staff numbers may be much more marginal?
Supporting Jobs Initiative / Kickstart Scheme
The Chancellor's prime concern is to ensure that young people become active in the employment marketplace and are that the current generation is not overlooked/forgotten.
Traineeships and Apprenticeships will secure Government financial support to employers of between £1,000 and £2,000 in order to encourage employers to hire new workers on permanent contracts of employment.
This may be of value to the motor industry who are regularly challenged by a shortage of service staff for whom these schemes may be very attractive.
In addition, the Chancellor has introduced the Kickstart Scheme in which the Government will provide 100% of the minimum wage plus NIC and pension contributions for employers who provide 6-month placements to individuals aged between 16 – 24 who work at least 25 hours per week.
This may also be welcome within the motor industry and particularly in areas where new skills and requirements brought about by the lockdown have become in demand (for example social media and related marketing skills).
Protecting Jobs Undertakings
Concern about the hospitality sector has meant that specific initiatives have been directed at the sector in order to try to restart activities.
Specifically, a temporary reduction in VAT to 5% (15 July 2020 to 12 January 2021) and a novel “Eat Out to Help Out” initiative which reduces the cost of food and non-alcoholic drinks for customers during August are to be welcomed even if the likely effect might be marginal overall.
The motor industry’s request to introduce a VAT reduction on new cars and a scrappage system was overlooked. However, these ideas should not be discounted in the future as the economy has a long way to go to recover. Specifically, the reduction in the price of a cinema ticket, burger and fries is unlikely to lead to the economic recovery of itself, however much it will assist in galvanising the morale of the country that has endured so much in 2020 already.
Creating Jobs Investment
Adopting the policies of history during recessions, the Chancellor intends to enable the country and the economy to recover by building ourselves out of recession with a series of public sector projects. Allied to infrastructure, public sector housing, and green initiatives, these proposals also include a green homes grant (to make homes more energy efficient) and a temporary SDLT reduction eliminating SDLT on all property purchases up to £499,999.
Such measures, designed to eliminate recession, are indirect of benefit and should be welcomed by the motor industry.
Any Chancellor, not just the current occupant of No.11, will be damned if he does and damned if he does not. The current Chancellor cannot be accused of lacking the resilience to make decisions and to make himself accountable.
However, there is a sense, no matter how much is invested in these ideas, that businesses will come to their own conclusions and that the effect of all of these initiatives may be insufficient to hold by the now inevitable downsizing contemplated within the economy.
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