The Government has announced a raft of new measures in a bid to restart the economy amid the coronavirus pandemic crisis. Chancellor, Rishi Sunak announced the changes as part of the Government’s Summer Economic update.

In response to the announcement The Money Advice Trust has welcomed the Chancellor’s summer statement, with measures to support jobs.

Joanna Elson OBE, Chief Executive of the Money Advice Trust, said “The Chancellor’s plan for jobs will come as a relief to millions of people who are facing extreme economic uncertainty – and we welcome these new measures to support employment in the wake of Coronavirus.”

“We now need to see a similarly ambitious plan for tackling household debt which, like unemployment, risks becoming a lasting legacy of this crisis.”

“Debt problems are likely to increase in the coming months as temporary relief measures come to an end – and the next key date for many households will be the end of the government’s bans on bailiff visits and evictions on 23rd August. This is just weeks away. The government needs to take action now to protect renters and reform the way council tax arrears are collected, in particular, to prevent pushing people into further difficulty.”

Stephen Haddrill, Director General of the Finance & Leasing Association (FLA) said “While we support the Government’s efforts to get the economy going again, the measures announced today are primarily short-term stimuli, and need to be supported by more substantive plans for long term growth.”

“The FLA will be publishing its own recommendations for the UK recovery next week, which will look at the short, medium and long-term needs of an economy where confidence must first be re-established, then consolidated with investment in new ways of doing business.”

“A sustained recovery will require lenders to play a major role. But to do so, they need more support, particularly those outside of the Bank of England schemes, because of the scale of assistance they are currently providing to their customers in difficulty – our most recent figures show that FLA members received over 1.8 million requests for forbearance. When furlough comes to an end, millions will remain out of work. Supporting them and the economic recovery at the same time will be a bridge too far.”

Robin Fieth, Building Society Association (BSA) CEO said “We are pleased to see the temporary lifting of the Stamp Duty threshold to £500,000, especially the fact that this will happen with immediate effect. This change takes effect in England and Northern Ireland and we hope that the Scottish and Welsh Governments will consider taking a similar step.”

Colin Fyfe, Chair of the BSA Green Finance Taskforce and CEO of Hinckley & Rugby Building Society said “The step taken today as the UK Government launches its £2bn green homes grant is positive, although only a first step. It will promote the creation of very necessary jobs and raise consumer awareness about the economic and environmental value in making properties more energy efficient.”

“Now we will need to show them how they do that, and what support can be offered if the £5,000 per household vouchers do not cover the full costs. Building societies are committed to play their part to help house-owners make these positive changes.”

Eric Leenders, Managing Director of Personal Finance at UK Finance, said “The chancellor’s announcement on stamp duty should give a welcome boost to the housing market and in turn have positive knock-on effects for the wider economy.”

“This measure designed to re-boot the housing market builds on the wide package of support put in place by mortgage lenders, working with the regulator and HM Treasury, to help customers through these tough times.”

“The industry has a clear plan to help homeowners whatever their financial situation and is committed to providing ongoing support to those customers who need it.”

Michael Izza, ICAEW Chief Executive, said “After the enormous level of government financial support put in place in recent months to protect businesses and preserve jobs, the challenge the Chancellor faced today was to engineer a soft landing for the economy when it is phased out – as it inevitably must be. He has made a good start, acting to rebuild confidence on one hand, while offering targeted and tailored help to companies to get them through to what we hope will be better times in 2021.”

“Mass unemployment would have a crippling effect on our economy and society and the Chancellor is right to make that his priority for now. However, at some stage the public finances must be restored, and action taken to reduce the huge debt the UK is carrying. The Chancellor must tackle this in the Budget later in the year, together with a comprehensive and sustainable strategy to bring on the long-term economic transformation we need to see over the next decade.”

“There will doubtless be practical issues with implementing some of these measures, such as temporary cuts to VAT, and we will continue to work closely with HMRC and other government departments to address these.”

Stuart Miller at Customer Director at Newcastle Building Society said “This is fantastic news for people looking to move home or buy a home for the first time and is very welcome news for the housing sector and the jobs within it, which have been so badly affected by the COVID-19 pandemic.”

“For the North East in particular, it means that almost 100% of first time buyers will be able to avoid paying stamp duty based on average property prices across the region.”

Federation of Small Businesses (FSB) National Chairman Mike Cherry, said “We’ve always said that the Chancellor should take a jobs first approach to today’s intervention and that’s exactly what he’s done. The Chancellor is absolutely right to stress that the job of getting the economy back on its feet has only just begun.”

“Will this set of measures be enough to spur activity over the coming weeks? That’s something that will need to be kept under close review – we may need further action before the autumn.”

“The key now is making sure these positive new measures work for all, especially the small firms that make-up 99% of our business community and employ 17 million people. The job retention bonus must be easy to access. We can’t have paperwork holding up this vital support.”

“We pushed for incentives to take on apprenticeships and it’s good to see those delivered today. The funding and subsidies for apprenticeships, kickstarter roles and traineeships need to be accessible. Young people are looking for work now.”

“A VAT cut for food, accommodation and attraction businesses alongside the ‘eat out to help out’ initiative marks a critical step forward. We look forward to collaborating with policymakers on the latter to ensure that those who are deserving don’t miss out. The Treasury should now assess how it can build on this progress, taking another look at our regressive business rates system once we get to the autumn.”

“The focus on green jobs and infrastructure is encouraging to see. Making small firms a central part this push will be critical to its success and local growth. Our late payment crisis has worsened throughout lockdown and we need to see government taking a zero tolerance approach on this front: if you can’t pay on time, you don’t win public contracts.”

“Equally we need to know that green vouchers and incentives will be extended to small business premises as well as households.”

“Whilst the majority of small businesses have been supported by the Chancellor’s emergency measures, some have not. We need the Government to spell out how it will help the newly self-employed and company directors who have once again been overlooked this afternoon, and have now been left without help for more than 100 days during this incredibly difficult period. That fact should be recognised once we reach the autumn.”

Jonathan Geldart, Director General of the Institute of Directors, said “The Chancellor pulled a few rabbits out of his hat today, but many directors will feel like he missed a trick. We fully understand the Treasury’s desire to focus on the young, and particularly badly-affected sectors, but coronavirus has crippled many parts of the economy.”

“The JRS bonus offers something of an off-ramp from the furlough scheme, and firms will certainly be doing all they can to keep people on board. However, with cash so tight now, January may feel like a long way off for some businesses. Meanwhile, the Kickstart Scheme is a welcome idea, and we hope the system will be easy for employers to use. The boosts for apprenticeships and other training are also steps in the right direction.”

“Support for hospitality will clearly go down well with the sector. However, we were looking for broader-based measures to help companies ride out the crisis – which is by no means over – particularly for those who have so far fallen through the gaps of support schemes. A glaring omission throughout this pandemic has been the exclusion of small company directors, many of whom have not been able to access income support. Widening grant schemes could help those who have been left struggling without assistance, and help more firms to re-open.”

“While boosting green investment marks a welcome step towards our long term goals for the economy, it can only be the start, and we will need much more encouragement to help businesses invest in green and digital technologies. At the same time, with our data showing exports have taken a knock due to the pandemic, it’s essential that sufficient measures are taken soon to aid international traders so we can avoid a perfect storm come the end of the year.”

“The Chancellor’s greatest strength has been his willingness to adapt as the situation moves. While there were certainly things for businesses to welcome today, there is still a long hard road back to full economic health.”

Markus Kuger, Chief Economist Dun & Bradstreet said “Since January, the UK government has deployed loans, grants and subsidies to British businesses in their droves in order to mitigate the impacts of lockdown. But, as was made clear in today’s summer update, it still won’t be enough to save the thousands of job losses predicted once the furlough scheme ends. From the £1,000 job retention bonus, to tax cuts for businesses to encourage the preservation of jobs, it’s evident that curtailing unemployment remains the Chancellor’s biggest priority.”

“In our latest Global Risk and Country Outlook report [attached], we predict that the global economy will contract by a further 5.2% this year, which is the biggest decline since the Second World War. We are also maintaining a ‘deteriorating’ outlook for the UK and today’s news about additional stimulus for the economy and funding to help the rising number of unemployed people will be welcomed by many who are facing an uncertain future.”

“While continued social distancing measures and thousands working from home mean it’s far from business as usual in the UK, the easing of lockdown restrictions will go a long way to kickstarting the economy. Our data and commerce disruption tracker shows the continued impact on businesses across the country but as we approach the next annual Budget in autumn we expect there to be a muted economic recovery in the coming months, and government support for UK businesses will remain critical in helping to retain the workforces and stimulate renewed economic growth.”

Anna McEntee, Product Director at comparethemarket.com, said “A cut to VAT may be welcomed by sectors of the economy which have suffered the most during lockdown, but our Household Financial Confidence Tracker suggests that a cut to VAT may do little to convince people to get out and spend. 46% said that slashing VAT would incentivise them to visit shops in person, but 52% said it would make no difference. Among those who are already unwilling to visit newly opened shops, only a third (33%) thought that cutting VAT might change their mind.”

“While the Government’s additional measures to introduce a substantial 50% ‘eat out to help out’ discount could go some way entice people out of their homes and stimulate the restaurant sector, concerns around social distancing are still predicted to significantly impact areas such as retail.”

“Increased comfort with shopping online suggests it will take some time before footfall picks up again and for retailers to start to see the benefits of an easing lockdown. Our research shows that 59% of people do not plan to go to these shops in person. Today’s tax cut alongside the Government’s rallying cry of “get out and shop”, looks easier said than done.”

John Goodall, CEO at Landbay, said “The Green Homes Grant for homeowners and landlords as well as the reduction in stamp duty is a really positive move by the Chancellor. While, inevitably, the additional 3% stamp duty will remain in place for those who already have another property, for landlords buying a property of £475,000 for example, this will mean a saving of £13,750 in stamp duty, which is a huge opportunity for those looking to expand their portfolios. It will also give landlords the opportunity to move properties from their own name into limited companies, which they may not have done previously due to the stamp duty implications.”

“In addition, the incentives to bring back furloughed workers and the investment in hospitality should mean that unemployment may not be as high as some may have expected. With the number of schemes now in place to support jobs this should give landlords some confidence that there will be fewer rental defaults than may have been the case.”

“This is clearly a positive way forwards both for homeowners and for landlords and should deliver the kickstart to the property market that the Chancellor wanted to achieve.”

Maria Rana, Lecturer in economics and finance from the University of Salford Business School said “In the first quarter of this year UK GDP experienced its sharpest quarterly contraction since 1979 (ONS). Last week, more than 12,000 jobs were slashed in just two days. The IMF expects the UK economy to contract 10.2% this year, with only a partial recovery in 2021.”

“That is the background to Chancellor Rishi Sunak’s announcement today of a package of measures designed to support the economy as Covid-19 lockdown measures have been further relaxed last Saturday.

“During a crisis that has been defined “like no other” and with uncertain recovering, did we get what we needed?

“The temporary cut of VAT to 5% in the hospitality sector, as well as the 50% discount for meals out are welcome and should help sustain demand. However, these incentives might not have the desired effect in the absence of an efficient tracing system that can help people to feel safe to go out. Additionally,  the plan to award £1,000 to those businesses that keep workers employed until the start of the new year seems an insufficient measure to contain the wave of redundancies expected once the furlough scheme ends in October.”

“It also remains to be seen who will benefit the most from the stamp duty cut. This, in fact, might be not enough of an incentive to boost demand for houses in a time when people are actually worrying about the uncertainty of their jobs and future with precautionary saving as a consequence. One thing, unfortunately, seems to be certain: the UK and world economy are in for a rocky few months. ”

“In October 2013, the then Chancellor of Exchequer, George Osborne, justified austerity measures by saying that the UK Government should be ‘Fixing the roof while the sun is shining’.”

Todd Davison, MD of Purbeck Insurance Services said “Lending to SMEs is going to be much more risk-averse than they were prior to the pandemic. It is likely that new finance will be heavily dependent on a business owner’s willingness to sign a personal guarantee – effectively putting their personal assets on the line if the business fails.  After months of worry and uncertainty, this is not what small businesses need. ”

“However it is important business owners and directors understand that a personal guarantee doesn’t have to be a barrier to getting the finance they need.  Personal Guarantee Insurance can cut the risk, paying up to 80% of the outstanding loan amounts due if the business fails.”